Being in a COMM 101 class that spent plenty of time discussing government intervention and ethics in business, I decided to share a New York Times article about the state of New York filing an antitrust lawsuit against a pharmaceutical company. According to New York’s attorney-general, Forest Laboratories, owned by Actavis, is seeking to force patients (consumers) to switch into a new line of dug for treating Alzheimer’s Disease while discontinuing the low-priced generic versions of the medication. To make a long story short (read the embedded article!), Actavis is creating a monopoly by using patents and its small niche as a rare disease drug producer to kick out competition, much to the possible expense of Alzheimer’s Disease patients.
Fig. 1) Actavis’ old drug, Namenda, is merely switched into Namenda XR, simply a pill with higher dosage to make administration more convenient. Image by Forest Laboratories Inc.
The heart of the matter lies in government control: to what extent is New York justified in suing Actavis? While desiring competition, US courts have traditionally been uneasy about barring companies from developing new products. Why? It suppresses innovation and the incentives for large companies to develop drugs for patients suffering rarer diseases. That argument is very valid with the case to Actavis, a leader in producing drugs for the notorious Alzheimer’s Disease. The image of governments barring industrial firms from innovation and development is a classic doomsday picture of the “end of economic liberties.”
However, it must not be ignored that with a monopoly, Actavis can exploit the situation to maximize personal gain (as per the assumptions of most capitalist economic models). This clearly puts Alzheimer’s Disease patients at risk. What makes this situation special is that Alzheimer’s Disease patients are not just consumers, but vulnerable consumers. Due to their reliance on the drug, patients have virtually no bargaining power over Actavis as they need it to survive! Also, if Actavis is going to be content with monopolizing its market, it’ll have little incentive to innovate new and better products for patience, defeating the argument that the lawsuit would restrict innovation from corporations. Lastly, pushing away patents allows other companies to innovate and bring medicine to needy patients. This will offer expanded room for jobs, fair prices, and an advancing society in one package. Ultimately, the action of government intervention can easily be justified when the product is limited and needed for the survival of a vulnerable group of people. Such products are too precious to be held in the hands of a company whose business model is driven by self-interest and must be guaranteed by a more “generous” entity.
Image Citation
Fig 1. Forest Laboratories, Inc.,. (2014). Diagram comparing Namenda with Namenda XR. Retrieved from http://www.namendaxrhcp.com/Assets/images/dosing-current-patients.png. (accessed September 14, 2014).