OK I will try to not be a dick (I'm good at that).
It takes $2,000,000 to $3,000,000 to get the FDA to go through the approval process... and up to 10 years in a lot of cases. It also takes so much paperwork to give to the FDA that it has to be delivered in a semi. That paperwork has tied up in it millions in research and lawyer and other associated costs.
That is the main barrier to which I refer, and the FDA is part of the federal government.
Another barrier is lawsuits brought by the patent holder. Of course they don't want any other entrants to the market- they want the monopoly/corner on the market so they can continue to make big bucks. How do they make more money? Raise prices since there's no other competitors. When your 20 years runs out on the patent, other generics can enter the market and you no longer have the market cornered.
As I understand it (and could be wrong on this point), others (henceforth 'little guy') have tried to enter the market but the patent holder sued the little guys successfully and somehow demonstrated to a judge that their patent was somehow infringed. This is the name brand meds vs. generic meds stuff you hear about all the time- generic is cheaper because the patent ran out and little guys entered the market.
Now in this case we have the courts and the FDA (henceforth: tha guvment) preventing the little guy from bringing his generic to market. This leaves the patent holder with their corner on the market. So why did the price go up?
1) Patent holder still has a monopoly on the market
2) Patent holder's CEO has responsibility to the shareholders and the board of directors to make stock go up and to make the company money, so they raise prices on the captive market (I'm not saying it is right, but a CEO that doesn't maximize profits is quickly replaced). This is why the price is now what I would call an unconscionable $630.
Is it right or ethical? I'd lean to 'no' at $630 a pop. But the bottom line is tha guvment (via primarily the FDA's high $$ barrier and the court's upholding patent infringement) is fugcking this all up.
I'm sure it's slightly more complicated, but to understand the problem you have to first understand why basic supply/demand isn't working like it should. Once you understand one outfit controls the entire supply, things become a little more clear. Once you understand how that one outfit remains the sole supplier, you see how the whole supply/demand thing works and prices are raised.
I'll quote Sam again:
simplistic and sophomoric. There is so much more than that at play with drug prices. If you think prices are too high, in general, it's because of the FDA or the DOJ. Both drive the price. Blame a politician, a bureaucrat or a lawyer, not the company that makes and sells the product. They make very little on it, and on stuff like EpiPen, probably lose money.
Only thing I disagree with is his last sentence. They're making plenty off this particular EpiPen product- it's dirt cheap.
The government gives you a 20 year patent when you 'invent' a new medicine. This allows the inventing outfit to hold a 20 year monopoly to recoup their operating costs (lawyers, researchers, 'ransom' $2-3M to the FDA, other operating costs, etc). After that other manufacturers can move in and undercut the market (unless they get their asses sued off and lose).
Do I agree with the $630 price? Of course not. But the patent holder has managed to keep their monopoly, right or wrong. And they can charge whatever they want. If I were the CEO of that company, I'd be charging a first-born for the EpiPen too, lest I get my ass fired. It's only because they can charge it that they do. They can only charge that price because the government has kept competitors out of the market. If someone brought another equivalent product to market for $20, no one would ever buy a $630 EpiPen.
