In fact Daraprim/Pyrimethamine shows some interesting features of markets:
* the market in the United States is so small, that there is a single manufacturer
* Generic drug manufacturers try to come in the market, the brand-name holder has made it extremely hard for them to do equivalence testing by making the drug available only through a restricted channel that excludes them.
* Even if them manage to get the drug to the market, the brand-name manufacturer can lower prices temporarily, ensuring they exit.
* The same manufacturer can have doctors prescribe the expensive brand-name versions of the drug by buying them off.
Instead of leaving patients in the hands of such natural or almost natural monopolies, the government can fix this situation in a variety of ways - price ceilings, subsidies, even government production of drugs for rare diseases.
You can argue that, some regulation somewhere has given these companies a monopoly, but without any regulation, there would be no market to speak of - the off-NDA drug market isn't one I and assume most patients trust.
The way around the trust issue is to make the "and effective" part of FDA regulation optional. Drug companies can only market "and effective" if they get the FDA approval of it. The rest can only market it as "safe". This can dramatically reduce the prices of drugs, and it is the user option whether they want to pay extra for the "and effective" certification or not.
It was optional until the 1960s. It was changed to be mandatory because the market was full of safe but useless drugs. Considering how mere differences in marketing requirements have not stopped a flood of useless homeopathic remedies, I expect that useless drugs would come back in force if that change were reversed.
Americans have paid a heavy price for this in terms of large reduction in the number of new pharmaceuticals coming to market, long delays for new cures, and, of course, huge price increases.
See "Regulation of Pharmaceutical Innovation" by Sam Peltzman.
the government can fix this situation in a variety of ways - price ceilings, subsidies, even government production of drugs for rare diseases.
I'd think they should require cooperation with the equivalence studies, and possibly foot (part of?) the bill for those studies. Try to minimize the downsides of their (overall important and helpful, if perhaps taken a bit too far) regulations that cause the problem.
Price ceilings for anything with a government-granted monopoly would also probably be good, but that's... not exactly the issue here, since the drugs in question have gone off-patent.
* the market in the United States is so small, that there is a single manufacturer
* Generic drug manufacturers try to come in the market, the brand-name holder has made it extremely hard for them to do equivalence testing by making the drug available only through a restricted channel that excludes them.
* Even if them manage to get the drug to the market, the brand-name manufacturer can lower prices temporarily, ensuring they exit.
* The same manufacturer can have doctors prescribe the expensive brand-name versions of the drug by buying them off.
Instead of leaving patients in the hands of such natural or almost natural monopolies, the government can fix this situation in a variety of ways - price ceilings, subsidies, even government production of drugs for rare diseases.
You can argue that, some regulation somewhere has given these companies a monopoly, but without any regulation, there would be no market to speak of - the off-NDA drug market isn't one I and assume most patients trust.