Making a business model out of gaming the federal regulation system
An Orphan Jackpot
By STEVEN RATTNER, NYT
ONE sure sign that federal regulations and policies are out of whack is when companies start making a business model out of gaming them. That’s particularly true in two areas of government rule making — drug regulation and corporate taxes.
Consider the success of Jazz Pharmaceuticals.
Just four years ago, this little-known company was struggling: its share price was measured in pennies, and Jazz had missed a string of interest payments on its debt. Today, its stock has levitated to $68 per share.
Jazz accomplished that $4 billion enrichment of its shareholders thanks to well-intentioned federal regulations that deterred competition for its principal product, compliant health insurers, and a Swiss-cheese corporate tax regime.
Don’t get me wrong: Jazz’s mainstay, Xyrem, which is currently used by about 10,500 Americans, is a good drug. While it doesn’t cure any deadly disease or even directly prolong life, it does help those with narcolepsy, a debilitating ailment that causes people to fall asleep unexpectedly during the day, and a related condition, cataplexy.
(More here.)
By STEVEN RATTNER, NYT
ONE sure sign that federal regulations and policies are out of whack is when companies start making a business model out of gaming them. That’s particularly true in two areas of government rule making — drug regulation and corporate taxes.
Consider the success of Jazz Pharmaceuticals.
Just four years ago, this little-known company was struggling: its share price was measured in pennies, and Jazz had missed a string of interest payments on its debt. Today, its stock has levitated to $68 per share.
Jazz accomplished that $4 billion enrichment of its shareholders thanks to well-intentioned federal regulations that deterred competition for its principal product, compliant health insurers, and a Swiss-cheese corporate tax regime.
Don’t get me wrong: Jazz’s mainstay, Xyrem, which is currently used by about 10,500 Americans, is a good drug. While it doesn’t cure any deadly disease or even directly prolong life, it does help those with narcolepsy, a debilitating ailment that causes people to fall asleep unexpectedly during the day, and a related condition, cataplexy.
(More here.)
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