by Jacquelyn Horkan, Editor
January, 2002

Where Do Little Pills Come From?

Here’s a reminder to certain politicians who wanted to force Bayer AG to relinquish its patent on the anthrax-fighting antibiotic, Cipro: Medicine doesn’t grow on trees. Rather, each new wonder drug arrives on the market after investments of millions of dollars and years of research and testing.

New York Democratic Sen. Charles Schumer, was the first to fire the warning shot across the bow of the German pharmaceutical firm, suggesting that the U.S. government invoke emergency measures to allow mass production of generic versions of Cipro. In the end, the Feds simply forced Bayer into selling the pills to them at cutthroat rates. The U.S. discounted per-pill price was negotiated down from $1.77 to 90 cents; U.S. pharmacists had been paying $4.67 per pill.  

Cipro, which was originally developed as a treatment for urinary tract infections and diarrhea, was only recently given the okay as a treatment for anthrax after Bayer applied for label approval last year at the request of the Pentagon and other governmental agencies. Although it is the only one with label approval from the Food and Drug Administration, penicillin and doxycycline were found equally effective as Anthrax-treatment agents in research conducted in 1990 by the U.S. Army amid fears that Saddam Hussein would unleash biological weapons during the Gulf War.

Three other antibiotics are now awaiting approval from the FDA for treatment of Anthrax. Thus the quandary faced by policy makers was not a shortage of effective medicine -- there is plenty of medication available to meet medically necessary demand, if not that induced by hysteria. Rather, the government simply wanted to cut its costs.

Throughout the Clinton years, members of the administration, from the President to the First Lady and on down, excoriated pharmaceutical interests for profiteering at the expense of the ill, the infirm, and the children. Their political cheap shots, which informed the Cipro episode, ignored the simple beauty of a pricing system that allows drug firms to protect their investments through the use of patents.

The actual manufacture of a pill is the cheap part of the process; the heavy lifting is done during the research phase of trial and error and while the drug goes through the different steps of testing. Selling their products at their own prices during a patent lifetime allows pharmaceutical firms to recoup the costs of developing drugs and provides funding for the research and development of the next generation of medicines.

As the authors of the Independent Institute essay, “Political Panic Trumps Terrorist Tragedy,” so aptly observe, “Letting the ‘anthrax scare’ ... break this link between up-front investments and future profits reduces the expected returns to R&D and greatly increases the uncertainty of the whole drug development system.”  

 

By Any Other Name

Anti-capitalists have subdued their roars in recent weeks, but they’re sure to return to their brick-throwing ways soon. When they do, you might want to recall the World Bank’s four decades of data from 80 countries proving that free-market policies raise the income of the poor as much as it does the rich. The two policies that helped the poor the most were reducing inflation and cutting public spending.

In case you’re interested, one of the two World Bank researchers answers to a deliciously suitable name: David Dollar.

 

A New Cast of Critics

A  substantial minority of federal government workers have joined the chorus of those who find fault with the people who make our nation’s government run. The discovery is one of the findings in a first-of-its-kind telephone survey sponsored by the Brookings Center for Public Service.

The survey, completed before the terrorist attacks, gave 1,051 public service employees a unique opportunity to express their opinions in the privacy of their own homes. Most said they were proud to work for the federal government and believed that their agencies do a very good job when it comes to helping people.

Forty percent, on the other hand, rated office morale as somewhat or very low and almost half of them said that the Clinton administration’s stab at reinventing government actually made their jobs more difficult to perform. And it gets worse: One quarter of the respondents say their co-workers aren’t doing a good job. Paul Light, author of the study, was shocked to learn that four in ten federal workers blame poor performance on a lack of expectations placed on slackers. Nearly half of them believe that “job performance has little or no bearing on their chances for promotion.”

In other words, a Byzantine system was reinvented to become even more complex, while little was done to punish the bad apples or reward the good workers.

 

I Vant To Suck Your Deep Pockets

A center for vampirology. Walking, talking, flying Draculas. A Dracula golf course, Dracula salt and pepper shakers, and Dracula baseball bats. Artists drawing portraits in the subject’s own blood.

You’ll find it all at the Dracula theme park in Sighisoara , Romania . This celebration of the undead one is testament to the unleashing of the entrepreneurial drive in the former Soviet Union , although, in this case the dreams of profit are spun out of city hall. Funding for construction of the Dracula project will come from shares sold on the Romanian stock exchange.

According to an October 30 Wall Street Journal article, the theme park represents nothing more than a community taking advantage of one of its natural resources, in this case, the legend of Vlad the Impaler, son of the Count Dracul and Romania’s medieval hero. Dan Matei-Agathon, the country’s tourism director and a chevalier in the Order of Dracula, says,  “I realized I had a world-renowned marketing icon that I could wrap in a ribbon and sell.”

In the meantime, the Romanians are learning an important lesson in capitalism: where there’s money there’s lawyers. Growing up in a world without private property, little did the Romanians expect that there might be barriers to cashing in on their national hero. Fortunately, attorneys for Universal Studios, which holds worldwide rights to the Count Dracula character, are filling in the gaps in Eastern European knowledge.

Meanwhile the real Dracula -- who never actually sucked an ounce of blood -- is drawing more attention from his spiritual descendants. Lawyers for the heirs of a former Romanian princess have filed a lawsuit against the government demanding the return of an ancient 14th century fortress popularly known as “Dracula’s Castle. If they can’t have the castle they’ll gladly settle for $25 million in compensation.

Driving While Dialing

New York ’s mandate on hands-free cell phones in automobiles, the nation’s first such statewide ban, went into effect on November 1. And Gotham ’s cops really have nothing better to do than watch for drivers illicitly clasping phones to their ears?   As a safety measure, transportation officials often compare the bans on handheld cell phones to seat-belt laws, a correlation that is, at best, misleading; at worst, it’s nonsense. Dialing the phone, answering it, or talking over it are all roadway distractions, but bans such as New York’s do nothing to alleviate problems associated with the first two actions. As for mobile gabbing, a National Safety Council study found that the level of driver distraction is essentially the same whether the phone is in someone’s hand or is resting in a cradle.

And, while talking on the phone diverts a motorist’s attention from his most important task, so do applying makeup, changing the radio station, and soothing the wailing infant in the back seat. None of these activities face censure but they are the kind of mundane preoccupations that transportation officials blame for 4,000 traffic deaths a year. According to a 1999 study from the AEI-Brookings Joint Center for Regulatory Studies, driving and talking accounts for about 100 fatalities a year, less than one percent of the annual total of traffic fatalities.

So why ban cell phones? Because many politicians live by a simple creed: If you can’t solve a problem at least do something; taking action, whether or not it accomplishes anything, might convince some voters that you really do care.

And It’s Anthrax Free

Wonder what our fighting men and women are up to over there in the Arabian Sea ? According to the Los Angeles Times, they’re ordering candy corn, downloading applications to Yale Law School , and engaging in father-son one-upmanship -- thanks to the Internet.

Sailors aboard the USS Carl Vinson have to sign up a day in advance to spend half an hour on the ship’s library computers, bringing home a little closer. Internet access is still an occasional thing, a privilege sometimes lost to the interests of security. Still, when the system’s up, the computers handle 60,000 e-mails a day, coming and going.

For the sailors, e-mail is a welcome break from the tedium and stress of life at sea; for the rest of us, however, it’s become a thing of necessity. There are more e-mail users than Web users in the United States , and they send over one billion messages a day. In a Gallup poll of Internet users, 97 percent said that e-mail has improved their lives. Another Gallup poll showed that more than half of all e-mail users would give up their cell phones before they would relinquish their e-mail accounts.