Scott Alexander in Slate Star Codex:
Let’s review
how the pharmaceutical industry works: a company discovers and patents a potentially exciting new drug. They spend tens of millions of dollars proving safety and efficacy to the FDA. The FDA rewards them with a 10ish year monopoly on the drug, during which they can charge whatever ridiculous price they want. This isn’t a great system, but at least we get new medicines sometimes.
Occasionally people discover that an existing chemical treats an illness, without the chemical having been discovered and patented by a pharmaceutical company. In this case, whoever spends tens of millions of dollars proving it works to the FDA may not get a monopoly on the drug and the right to sell it for ridiculous prices. So nobody spends tens of millions of dollars proving it works to the FDA, and so it risks never getting approved.
The usual solution is for some pharma company to make some tiny irrelevant change to the existing chemical, and patent this new chemical as an “exciting discovery” they just made. Everyone goes along with the ruse, the company spends tens of millions of dollars pushing it through FDA trials, it gets approved, and they charge ridiculous prices for ten years. I wouldn’t quite call this “the system works”, but again, at least we get new medicines.
Twenty years ago, people noticed that ketamine treated depression. Alas, ketamine already existed – it’s an anaesthetic and a popular recreational drug – so pharma companies couldn’t patent it and fund FDA trials, so it couldn’t get approved by the FDA for depression.
More here.