Tuesday, February 25, 2014

The Free Market Strikes Again!

I spend less than $1,000 a year for supplies, so giving them out gratis is no sacrifice. Two or three times a year, I place an order at a pharmaceutical web site. It’s easy, but sometimes I get a jolt.   

I hand out doxycycline, an old antibiotic and the recommended treatment for the most common pneumonia and the most common sexually transmitted disease. In 2012 I paid $50 for a bottle of five hundred. That’s twenty-five treatments which works out to $2.00 apiece. I was running low, so I decided to reorder. Checking the web revealed that five hundred seemed to cost $1,655. That couldn’t be right, so I looked around, but it wasn’t a typo. So I ordered azithromycin, equally effective and about $4.00 per treatment.

This happens regularly. Remember penicillin? You may think it’s obsolete, but it remains a superb antibiotic and a fine treatment for common infections from strep throat to syphilis. Twenty years ago it was as cheap as aspirin. I could buy a thousand for $30. Now the price is about $200 and rising.

Here’s what happens. As a drug gets older and older, it gets cheaper and cheaper. But doctors like newer drugs. Everyone (you included) believes they are immune to advertising, but they’re not, and doctors are no different.

It’s a good rule that any drug in an ad is wildly expensive and not superior. Look at the ad: if it doesn’t say the drug is the best, it isn’t. A few years ago Avelox or Levoquin would cure your pneumonia as well as doxycycline at thirty times the cost. Doxycycline still costs less but not by as much.

As doctors incline toward a new drug, they prescribe the older one less. Pharmacies buy less. Pharmaceutical companies stop making it. Eventually the remaining companies notice the absence of competition, and “wham!!”  The free market strikes again.    

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