Posts Tagged ‘competition through regulation’

Tales of competition through regulation III: pharma v. compounding pharmacies

Compounding pharmacies, which mix medications to order, are a corner of the drug business that has been much less heavily regulated than mass-manufacturing drug companies. As a result, the compounders began expanding their market presence as against the mass manufacturers, and even get into mass manufacturing methods themselves. The process accelerated in the past few years after tightened FDA control of conventional makers’ production practices (under GMP, or Good Manufacturing Practice, regulation) began to result in widespread production-line suspensions; for hospitals and other users, the availability of compounded alternatives is often the only fallback in the face of shortages.

Unfortunately, poor quality control at some compounders resulted in a series of fiascos culminating in a meningitis outbreak. Now the Washington Post reports that major drug companies are seizing the chance to hobble their competition by pressing for maximally burdensome regulation of compounders, including the addition of regulations unrelated to safety, such as rules aimed at restricting the compounding of formulas that imitate the action of patented products. Hospitals, which sometimes engage in compounding themselves to obtain medication for their patients, say overregulation could worsen the problem of drug shortages. [Kimberly Kindy and Lena Sun, Washington Post] Earlier on drug shortages here, here, etc.

“Online dating regulatory wars”

What may sound like just another random outbreak of safety-firstism — a proposal to require online dating sites to notify users as to whether they carry out background checks of their users — may have a bit more to it than that, as Tim Carney discovered a few years ago when he found that the “alliance” backing the idea was an arm of an existing online dating site that would profit by handicapping its competition. [Washington Examiner]

Entrenched business uses regulation as tool against upstarts

Tim Carney is glad to see the New York Times returning repeatedly to this theme [Washington Examiner]

Not entirely unrelated, a video from the Institute for Humane Studies on how regulation contributes to the widespread use of corn sweeteners in place of sugar in our food supply (“Why Is There Corn In Your Coke?” with Diana Thomas):

Staring down in-state protectionism

The Supreme Court will consider whether to grant certiorari in the case of National Association of Optometrists & Opticians v. Harris, in which national eyewear companies are challenging a California regulation that works to the benefit of their locally based competitors. The Cato Institute has filed an amicus brief supporting certiorari, as Ilya Shapiro explains:

Under California’s Business and Professions Code, state-licensed optometrists and ophthalmologists are allowed to conduct eye exams and sell glasses at their place of business, while commercial retailers – such as the national eyewear chains represented by the NAOO – are barred from furnishing onsite optometry services. Since consumers have a strong preference for “one stop shopping” – buying their glasses at the same place where they have their eye exams – California’s law gives instate retailers a crucial competitive advantage. Businesses that cannot co-locate their services have quickly vanished from the market.

The Cato brief argues that by putting the out-of-state chains at an artificial regulatory disadvantage, California is violating the Constitution’s dormant Commerce Clause.

CFTC: InTrade prediction market is selling options, and requires our permission

“The CFTC is suing popular betting site Intrade. And now Intrade is telling its [U.S.] customers to start shutting down their accounts.” [Business Insider, Alex Tabarrok]

The CFTC says bets on future events must be exchange-traded as a way of assuring “market integrity,” but Bryan Caplan begs to differ:

The CFTC’s real complaint is that consumers eagerly bet on Intrade because the company exemplifies market integrity: “I trust Intrade with my money because of their reputation, not government regulation.” …The only people the CFTC is “protecting” are their own obsolete employees.

Brian Doherty notes that the CFTC’s press release is “strangely devoid of any mention of anyone being victimized or defrauded.” Followup: Tabarrok.

Onboard-recorder trucker mandate

It’s the old story: many smaller truckers have been trying to resist the mandate, which costs an estimated $1,500 per truck, but some larger truckers that already use the devices have encouraged its passage. The Federal Motor Carrier Safety Administration (FMCSA) estimates that the mandate will cost $2 billion; it’s meant to make it easier to monitor compliance with limits on how many hours truckers can be on the road. [James Gattuso, Heritage]