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.
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