Sunday, March 2, 2014

Big Tobacco + the FDA = Big Cronyism

Writing at Reason.com, Jacob Grier has an excellent analysis of how recent FDA anti-tobacco rulings not only don't hurt the large tobacco companies, they actually promote their interests.  How?  From the article:
Hestia's [a small, start-up company] difficulties highlight the anti-competitive effects of FDA regulation. The barriers to entry are immense and stacked in favor of existing tobacco companies that have extensive records detailing their earlier products.

These barriers are baked into the Tobacco Control Act, which resulted from an uneasy alliance between the Campaign for Tobacco-Free Kids and tobacco giant Philip Morris. It was speculated at the time of its passage that Philip Morris supported the bill to lock in its 50 percent share of the market, with competitor RJ Reynolds dubbing the law the “Marlboro Monopoly Act.” If that was the intent, the gamble has certainly paid off: Since 2011, Marlboro has had to face competition from only two new cigarettes.  [Emphasis Marc Street]
It's an excellent, detailed article and a good example of a subtle, counter-intuitive case of cronyism.