You may recall seeing public outrage over Mylan's Epi-Pen recently. The company had successfully convinced everyone that anaphylaxis was routinely killing kids with allergies and so they needed an epinephrine pen everywhere they went. Corporations desperate not to get shamed on Twitter jumped on the bandwagon and started putting them in as a marketing expense. Then Mylan raised the price for consumers. It caused a Congressional investigation and the public blamed Big Pharma.
But it's a generic medicine. Big Pharma greed did not cause that issue, the government did.
The only large competitor to Mylan's product had a manufacturing issue and pulled it from shelves. Government regulators demanded it go back through the regulatory system before it could be sold again and the cost was going to be so high they felt it was not worthwhile. So they left. Government has effectively created a monopoly while letting its government agencies permit claims that numerous lives are being saved. In reality, you are far more likely to die from murder on Thanksgiving, the biggest food holiday of the year, than from anaphylaxis.
A color change on a label for a medical product requires the work of 100 employees and 18 months in the approval cycle at the US Food and Drug Administration while supplements are exempted from all oversight if they put a small disclaimer on their label and don't kill too many people. The Bayer product Phillips' Colon Health was even able to win a court case against the FTC, which objected to its aggressive health claims about its probiotic supplement (in violation of their settlement on One A Day vitamins, where they promised to stop lying about benefits of their products), because they noted that President Clinton's 1994 DSHEA (Dietary Supplement Health and Education Act of 1994) law protected them, because they had put the disclaimer on the package. The court agreed, the law FDA wanted let Phillips' Colon Health engage in the kind of claims FDA should prevent, even though Bayer's own evidence showed it did not work.
By now, epinephrine and needles are well understood, neither is a "new" product and it should not require spending a billion dollars to create a competitor,. The same issue applies to insulin. Insulin has been well understood for 70 years, it requires no elaborate new ingredient, it was even the first GMO approved by government 37 years ago. Yet it is now expensive. The issue is not supply, nor is it the free market, the issue is that government cripples both because they make it very expensive to start a new company for a generic product.
Regulatory complexity favors the very large
Apple, Amazon, HP, etc. all started in garages. There is no way for an insulin company to start in a garage because government does not always engage in overt subsidies, sometimes they engage in subversive ones. If you are a drug company and have a successful Phase III drug, are you going to be able to raise $1.5 billion to take it to market? If not, you are forced to sell it to a large company that already has $1.5 billion. Jeff Bezos did not need $1.5 billion to start Amazon, nor did Hewlett and Packard. They engaged in commerce and with the proceeds engaged in more.
But with medicine the cost of scale is built in up front and if you argue that arcane regulatory mechanisms - which favor people with relationships - should be streamlined for products well-established, you'll be treated to horror stories about thalidomide babies, which was never approved in the United States because the European company wanted it sold here for an off-label use but remains a pop culture reference for people who hate science.
Its irrelevant. Thanks to a statistical cluster of medications that had recalls in the late 1990s we've increased the cost and effort for regulatory approval by double, with no improvement in outcomes. If you require a trial of 2,000 or 4,000, number 4,001 could still have harm in our diverse biological conditions but the cost is borne by consumers.
