when to get off…

Posted on Wednesday 21 March 2012

Hat Tip to Jack Friday at Pharmagossip 

What’s an economic bubble?
    An economic bubble (sometimes referred to as a speculative bubble, a market bubble, a price bubble, a financial bubble, or a speculative mania) is “trade in high volumes at prices that are considerably at variance from intrinsic values”. While some economists deny that bubbles occur, the cause of bubbles remains a challenge to those who are convinced that asset prices often deviate strongly from intrinsic values. While many explanations have been suggested, it has been recently shown that bubbles appear even without uncertainty, speculation, or bounded rationality. Most recently, it has been suggested that bubbles might ultimately be caused by processes of price coordination, or emerging social norms. Because it is often difficult to observe intrinsic values in real-life markets, bubbles are often identified only in retrospect, when a sudden drop in prices appears. Such a drop is known as a crash or a bubble burst. Both the boom and the bust phases of the bubble are examples of a positive feedback mechanism, in contrast to the negative feedback mechanism that determines the equilibrium price under normal market circumstances. Prices in an economic bubble can fluctuate erratically, and become impossible to predict from supply and demand alone.

And Alan Greenspan’s great folly?

“But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade? And how do we factor that assessment into monetary policy? We as central bankers need not be concerned if a collapsing financial asset bubble does not threaten to impair the real economy, its production, jobs, and price stability.”
Alan Greenspan [1996]

Alan Greenspan was wrong, and we’re now in the fourth year of living out the consequences of his irrational belief that such things were just part of the game. The series of financial bubbles [Internet, Housing, Oil] almost took our economy out, and we still don’t know the end of that story. While the Big Pharma Bubble was not limited to psychiatry, no other specialty based its essence on it like psychiatry. Big Pharma itself will simply downsize, and lots of pretty drug reps and scientists will be looking for work, but what about psychiatry now painted in the corner by Managed Care and the increasing outcry about psychopharmacology? That story remains to be told too…

It is no consolation to the roughly one out of 600 families who lost their homes in the U.S. but Wall Street made a lot of money slicing and dicing mortgages it knew would implode, while hiding risks. Financial giants, like AIG, are still buzzing along and neither penalties or new laws will prevent a future crash, say financial analysts, because the risky business models have not really changed. In fact, occlusive business models responsible for the previous Internet bubble in 2000 and for which CEOs are still in prison may soon be legal again under the U.S.’ pending JOBS Act. Thanks for that.

A similar Big Pharma bubble, leavened with risky blockbuster drugs that also blew up, is now bursting. Almost 20,000 jobs have vanished at AstraZeneca, Novartis and Pfizer in the last 12 months alone. AstraZeneca has scrapped 21,600 more jobs since 2007.

Forbes calls Son of Vytorin. Vytorin (the father) was advertised to treat both food and family "sources of cholesterol" until results from a study that Merck and Schering-Plough appeared to withhold from regulators showed the drug had no effect on the buildup of plaque in the arteries (believed to correlate with heart attack and stroke). There was such a gap between marketing and science, Sen. Chuck Grassley (R-Iowa) asked the General Accounting Office to investigate why the FDA was approving "drugs that appear to have little to no effect in protecting lives and increasing health."

In Europe, governments are no longer willing to pay the bubble prices for drugs that they once did say published reports and some countries are drafting laws making drug makers "prove their drugs are effective or risk having them dropped from the coverage list, or covered at a lower rate," says the New York Times. Imagine.

Germany has already saved 1.9 billion euros in 2011 by refusing to pay higher prices for drugs unless they are clearly superior to existing medicines, and Pharma worries that other countries will also get tough and want scientific proof for drug effectiveness instead of marketing and spin. In the U.S. and elsewhere, a drug only needs to be superior to no drug (placebo) to be approved by regulators–yet "new" is conveyed as "better than any drug to date" in advertising. Some clinicians say Haldol, an inexpensive antipsychotic and lithium, a similarly affordable bipolar drug are better than blockbuster psychiatric drugs that created Pharma’s 2000’s bubble…

Besides the obvious problems of the DSM-5 Revision that fill the blogs, most media outlets, and are becoming topics in the general patter overheard in coffee shops, the people in charge seem oblivious to the fact that they are barreling along a path that may have made sense when the started six or so years ago, but now borders on lunacy. This is no time to be pressing forward with their all-is-biology, grieving is sickness, chemical imbalance, genomics/proteonomics, clinical neuroscience agenda – even if they believe in it. This is a time to look broadly at the needs of the mental health community at large and create a nosology that’s widely useful and devoid of the kind of influences that have located psychiatry in a fading niche rather than as an overarching mental health discipline. Linking the fate of a medical specialty to an industry and/or an ideology is unprecedented in my experience, but fighting to maintain that link at a time when that very industry is going into a hibernation mode defies understanding. Even rats know when to jump ship…
  1.  
    March 22, 2012 | 5:37 AM
     

    Nice job Mickey, as always.

  2.  
    March 22, 2012 | 6:38 AM
     

    I moderate a Facebook Discussion group called UnDiagnosing Emotional Distress. https://www.facebook.com/groups/madinamericamidwest/

    Our idea is that people who are experiencing emotional suffering may do better without labels and medications. People may have grief, poor self-care, trauma, not enough social support, a bad job fit, an intolerable family situation, or any number of other causes for their extreme emotional states. In my blog, I outline here how emotional suffering can CAUSE psychosis, not the other way around: http://wellnesswordworks.com/emotional-distress-causes-psychosis/

    To create language to describe this evidence based approach to mental health care, our Facebook discussion group talks about blogs, our personal recovery stories, entrepreneurial approaches, and research into other social, temporary, or cultural ways to describe illness. We’d love more mainstream participants to join. https://www.facebook.com/groups/madinamericamidwest/

  3.  
    March 22, 2012 | 2:14 PM
     

    Too bad pharmaceutical psychiatrists are caught in the middle of the bursting of the pharma bubble. Their bread and butter turned out to be bread and circuses. They’re still prescribing, though, in a haze of denial.

    If I were one such, I sure would be asking my professional organizations to address the issue. Instead, we’ve got the APA preoccupied with keeping pharmapsychiatry on life support via such devices as the DSM-5. As David Healy said, practicing autoerotic asphyxiation.

  4.  
    March 22, 2012 | 6:25 PM
     

    The bigger they are, the harder the fall. I, personally, would like to never see the smug face of an “expert” on mental illness again. I have that “excessive bitterness” that the crafters of the DSM wanted to include as a mental illness.

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