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Home Publications Blogs Beat the Press Ruth Marcus Blames Private Medicare Insurers for the Lack of Innovation in the Pharmaceutical Industry

Ruth Marcus Blames Private Medicare Insurers for the Lack of Innovation in the Pharmaceutical Industry

Wednesday, 01 June 2011 07:15

Of course she probably did not know that this is what she is doing in her hypothetical conversation between "Paul" and "Barack," but that is exactly what she is doing when she touts the lower than expected cost of the Medicare drug benefit. The main reason that the drug benefit cost less than expected is that drug prices in general have gone up less than expected. And, the reason that drug prices have gone up less than expected is that there have been very few new blockbuster drugs in last decade.

This means that even though the industry claims that it is spending more than ever on research, it has much less to show in the form of new drugs than it did 20 years ago. It seems a stretch to blame this lack of innovation on the private insurers offering the Medicare drug benefit, but we can't question a very serious person with a regular column in the Washington Post.

The rest of this hypothetical discussion is equally confused. Contrary to what it asserts, the vast majority of Democrats did not think it was okay to have just private insurers in the exchanges set up under the Obama plan. They pushed hard to include a good public option. However, they did not have the 60 votes to get a public option through the Senate.

And the comparison of the cost of the Ryan plan to the existing Medicare plan is not a hypothetical. The additional $34 trillion cost that CBO projected for buying Medicare equivalent policies is based on the actual history with Medicare Plus Choice and Medicare Advantage. How many times must this experiment be repeated before its results are accepted?

It is worth noting that there is a simple mechanism for saving large amounts of money under the Medicare system. The government could give beneficiaries a voucher that would allow them to buy into the health care systems of other countries with longer life expectancies than the United States. The beneficiary and the government could split the tens of thousands of dollars in projected annual savings. If the Post was not such an ardently protectionist paper it would support this program

Comments (8)Add Comment
Dean needs caffean
written by frankenduf, June 01, 2011 8:14
the dems pushed hard for a good public option??!- wake up Dean, ur dreaming- in reality, the public option was taken off the table up front, thereby exposing the corruption of the dems awash in industry cash (one presumes the repubs are corrupt up front)
written by pete, June 01, 2011 10:13
AMA wont buy sending folks to cheaper doctors, Dean, sorry, get real. The AMA prevents us from giving GPs visas, so why do you think they would let us go elsewhere....
Don't forget
written by dopp, June 01, 2011 10:40
that the insurance companies pushing Big Pharma to move widely-used drugs to OTC from prescriptions have cut prescription costs to insurers (including Part D) but have cut not drug costs for consumers. Antihistamines and PPI's are two classes of prescriptions going OTC at the behest of insurers.
US needz Morphine!
written by Bruce, June 01, 2011 1:24
Since we were Obamanibly PROMISED single-payer, didn't EVEN get a DEM public option; were forced to the Obamanible DICTATE after he sabotaged federal lower drug price negotiation, cheaper imports from Canada and even getting them ourselves from there! Barack's a Lying DEM RENEGER at best and a sadistic Company saboteur, at worst.
Good grief!
written by Rich Gardner, June 01, 2011 4:21
I couldn't even get past the first two exchanges before I had to get up and walk around the room. This is the kind of "reporting" and utter lack of comprehension that our much-vaunted "mainstream media" is reduced to?!?!!? Can't anybody there come up to the standards set by the liberal blogs?
Diminishing returns
written by FGS, June 02, 2011 1:41
I think pharmaceutical research is well past the point of diminishing returns, in terms of inventing new, cost effective treatments. Drug molecules are getting bigger, more complex, harder to manufacture and more likely to cause severe adverse events like cancer, birth defects or liver failure.

I'm not surprised at all that innovation is slowing. No doubt patent absurdities have a lot to do with it, but scientists are also running out of small, simple molecules to study.
Public Option
written by Robert, June 02, 2011 6:46
The Democrats could have passed the public option through reconciliation, in which case they would have only needed 50 votes instead of 60 votes. There was a sizable minority of democrats opposed this route. It didn't help that the president wouldn't lift a finger to support the public option.
This gag has hair on it
written by Jay Schiavone, June 02, 2011 7:57
What really peeves me about Marcus' lazy and affected treatment of a serious subject is that Maureen Dowd years ago proved the "fantasy conversation" essay to be as absurd as it is fraudulent. At least she refrained from having one of her subjects exclaim, "I'm a wild and crazy guy."

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.