A court in Alabama has ruled that Pfizer Inc. can be sued over harmful side effects caused by generic versions of its drugs.
My first thought while reading the article was that this is outrageous judicial overreach in a state that has historically been somewhat known for being friendly to plaintiffs. It is, I thought, just allowing plaintiffs to go in search of the deepest pockets in the hopes of getting the largest possible recovery.
Then I read further. And it turns out that generic manufacturers are not allowed to put warning labels on drugs unless those warnings are also in the warning label for the original brand-name drug. That's when I realized that this was a classic case of outrageous regulatory incompetence. Oblivious bureaucrats at the Food and Drug Administration created a ridiculous situation in which Pfizer can be sued for a product it didn't make.
Then I read further. And it turns out that the FDA has proposed a new rule that would allow generic-drug manufacturers to add labeling to their products independently. And guess who's blocking it?
The generic drug manufacturers, of course. They've got a pretty sweet deal right now: They get the profits, while the folks who actually did all that expensive research to develop the drug bear a lot of the liability. They're in no hurry to have that change.
So what we've actually got, after all this, is a classic public-choice story: The government is currently doing something insane, which is being defended by the highly motivated special interest that benefits from the insanity. And a story that seems simple and intuitive actually is simple and intuitive -- and completely different from what you'd think.
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