Sunday, December 14, 2003

Oligopolies' inside man For oligopolies, heaven is having the right government officials regulating you. It is great if the regulators aren't sticklers about the law; even better when the regulators are apologists for, and patrons of, your industry. The motivation can vary: it can be intimidation, hope of future "consulting work", or ideology. For anyone interested in a lucrative career after a stint in the government, coming down too hard on the industry you monitor would be a big mistake. In the US pharmaceutical and food industries, now must be heaven. The head of the Food and Drug Administration (FDA), Mark McClellan, is not only happy to work with these industries, he's a big cheerleader. According to an article in the Philadelphia Inquirer ("FDA chief makes friend of industries," 11/8/2003), McClellan is working hard at making life easier for the industries he is charged with overseeing. According to one healthcare expert quote in the article, "He is without question the best thing that could have happened to the pharmaceutical and biopharmaceutical industries." The article also quotes the CEO of pharma giant Eli Lilly, who says "He is thinking of his mission in a broader way than most of his predecessors. He's looking at how we accelerate innovation in America." An industry critic is quoted as saying "I cannot remember an FDA commissioner who was so loved by industry…If he were doing his job, they would be saying 'This guy is really tough on us.'" Since he became FDA chief last year, McClellan has: Publicly criticized other countries like Canada and Germany for controlling drug prices for their citizens, making it harder for pharmaceutical companies to make even higher profits Made it easier for drugs with unproven health benefits to go on the market. Allowed food companies to make health claims about products with minimal testing. In general, he has made moves to relax oversights and safeguards instituted by his predecessors, all in the name of unchaining big business (which was doing pretty well already). The pretext is that it will unleash a new wave of innovation, benefiting the consumer, though there ha been plenty of innovation in the last 30 years with more stringent enforcement. The presence of a lapdog rather than a watchdog heading the FDA is worth many millions to the industries involved and those who run them. Oligopoly pressure and influence in government affairs are major reasons for getting big and working with your competitors. 10:22:08 PM

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