Thursday, January 24, 2013
Pharma Spam as Informal Economy
I have long been interested in the informal economy (the businesses that avoid some taxes, but offer legitimate services), so I found a Planet Money story about the companies that sell drugs via SPAM to be fascinating. See story here. Two companies got into a dispute so released each other's records (I'm not sure what they were doing with the other company's records in the first place, but anyway) giving a trove of data for researchers. Brian Krebs is one of the researchers who used this data, and like a historian or anthropologist (because anthropologists also only see a small part of the story, even when they live it), he has reconstructed how these companies that sell Viagra and Accutane operate. Among the interesting tidbits: profit margins for drug sellers is about 20% (less than Apple), and most customers are actually satisfied (ie the companies mostly sell the real pharmaceuticals, not poisons or fakes). And the spammers are different companies, who work on a commission of about 30-40%. Not mentioned in the story is that this informal economy exists because of irrationalities in our global patent system. This is the real globalization from below.