Hi, Welcome to BIG, a newsletter about the politics of monopoly. If you’d like to sign up, you can do so here. Or just read on… This one will be short piece on how the coronavirus is causing policymakers to wrestle with the problem of monopolization. But first, a follow-up on
Except that the FDA creates a new monopoly whenever it approves a new drug, device and even tobacco products.
FDA's 2016 cigarette protecting Deeming Rule (that Judge Paul Grimm ordered FDA to begin enforcing on May 12, 2020) protects Big Tobacco's oligopoly of three large cigarette manufacturers (by banning the sale of >99.9% of much less harmful nicotine vapor products now on the US market), which is why all large tobacco companies lobbied FDA to impose the rule.
Even worse, to replace the current free market (and thousands of small manufacturers) for nicotine vapor products, FDA's Deeming Rule will create a new multi billion dollar monopoly or oligopoly this will almost certainly be controlled by the largest tobacco companies.
It is probably worth asking the question whether these are incidental monopolies or not.
My understanding is that many of these issues in the health industry are often due to the FDA's regulatory overhead, or weird incentive structures related to the purchasing of the rights to manufacture drugs from those facilities already approved and high cost of approving others relative to what manufacturers could make back (aka "not worth the hassle")
Except that the FDA creates a new monopoly whenever it approves a new drug, device and even tobacco products.
FDA's 2016 cigarette protecting Deeming Rule (that Judge Paul Grimm ordered FDA to begin enforcing on May 12, 2020) protects Big Tobacco's oligopoly of three large cigarette manufacturers (by banning the sale of >99.9% of much less harmful nicotine vapor products now on the US market), which is why all large tobacco companies lobbied FDA to impose the rule.
Even worse, to replace the current free market (and thousands of small manufacturers) for nicotine vapor products, FDA's Deeming Rule will create a new multi billion dollar monopoly or oligopoly this will almost certainly be controlled by the largest tobacco companies.
Dear Matt, I was just introduced to your column. Important, clear, penetrating. Thank you.
It is probably worth asking the question whether these are incidental monopolies or not.
My understanding is that many of these issues in the health industry are often due to the FDA's regulatory overhead, or weird incentive structures related to the purchasing of the rights to manufacture drugs from those facilities already approved and high cost of approving others relative to what manufacturers could make back (aka "not worth the hassle")
See:
- https://marginalrevolution.com/marginalrevolution/2016/08/the-fda-and-the-epipen-shock.html
- https://marginalrevolution.com/marginalrevolution/2012/06/drug-shortages-caused-by-the-fda.html
or some of the other FDA related posts on MR generally: https://marginalrevolution.com/?s=FDA+drug+manufacturing