Billy LOVES the Free Market

We’re going to play a neat game. It’s called ‘Free Market’ Billy Tauzin versus ‘I Hate Competition’ Billy Tauzin. You can pick the winner at the end.

The drug industry loves to discuss the free market and its wonders. Billy Tauzin is the president of PhRMA, the leading drug industry trade group and former Louisiana Congressman. For a brief yet entertaining story on how Billy ended up as PhRMA president, see this column in Slate.

The following are quotes from Billy Tauzin, excerpted from a speech titled Free Market Health Care Solutions Are Best for Patients at something called an American Legislative Exchange Council Annual Dinner in San Fransico, CA. I added the color highlights.

Tonight, I salute you for your dedication to the fundamental principle that free-market based solutions work best for preserving our liberties and building a strong country, strong states and strong communities.

—SNIP—

The strength and success of America’s pharmaceutical research industry, I am proud to say, is just one example of what we work for when we fight for free-markets, reducing government interference in the economy and for fostering of an economic environment that promotes opportunity and innovation.

—SNIP—

But while we marvel at the promise of these new health care technologies and medicines, we should also not lose sight of the fact that patients are the ultimate beneficiaries of this revolution.

—SNIP—

We must work together to make sure that the healthcare market remains free because the best, most efficient and cost-effective solutions will come from a free market.

—SNIP—

And, if you want to work for free-market solutions to the problem of access to medicines, we also are there to work with you and support you.

—SNIP—

The free-market in health care helped save my life.

Okay, you get the point – Billy loves the free market and the free market in health care saves lives. And those good folks in PhRMA (e.g., essentially all major developers of medications) are all in favor of the free market.

News Flash -- PhRMA does NOT believe in the free market: While PhRMA likes when the market works in their favor, they also believe in circumventing that same market when it comes to competition. When drugs are slated to come off-patent, which would allow generic version of the drug to be made, PhRMA members have increasingly turned to buying off the competition. That’s right; they simply pay the generic manufacturer to not make a generic version of the patented drug, so that the consumer can continue to pay a hefty price for the drug which is still under patent. Ain’t that a nice deal? Here’s a quote from a recent AP story regarding this practice:

“Sadly, the incentive to enter in such pernicious pay-for-delay settlements are substantial,” FTC commissioner Jon Leibowitz told lawmakers.

In a typical settlement, the payment is still less than the potential loss in sales to a brand-name company once a generic competitor enters the market, said Michael Wroblewski, of Consumers Union. And the generic manufacturer makes more from the payment that it would from actually selling its version of a drug, he said.

But wait, Billy had this to say about pay-for-delay arrangements:

“Courts and experts have stated unequivocally that settlement of litigation should be encouraged and that settlement of patent litigation can benefit consumers. Blanket prohibitions on certain types of settlements could force both sides to spend valuable resources litigating their patent dispute to judgment,” said former Rep. Billy Tauzin, R-La., president and chief executive of the Pharmaceutical Research and Manufacturers of America.

What does he mean? Well, the makers of the patented drugs nearly always try to stretch out their patents through a variety of complicated legal maneuverings. So he’s saying that these pay-to-delay arrangements help to defray PhRMA member legal costs. Well, then, by all means, keep doing what you’re doing – we certainly wouldn’t want a drug company to have to hire an attorney to try to stretch out a patent. Between stretching patent expirations and fighting in court to keep their internal documents that likely reveal questionable marketing practices (or worse) secret, these poor drug companies must be drowning in legal fees. Cry me a river.

On one hand Billy loves the free market. On the other hand, Billy hates competition, which, incidentally is the foundation of the free market! Billy is likewise not a fan of Americans importing drugs from Canada; after all, they would also be a source of competition. Adam Smith must be rolling over in his grave.

Background on this story can be found here and here.