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Home Publications Blogs Beat the Press The United States Does Not Leave Drug Prices to the Market

The United States Does Not Leave Drug Prices to the Market

Tuesday, 21 September 2010 03:58

The Washington Post told readers that President Obama's health care plan leaves drug prices to the market. This is not true.The plan leaves in place government issued patent monopolies that raise prices by many times above their competitive market price.

At one point the piece notes that the health care plan's closing of the "doughnut hole" for prescription drugs in Medicare would cost the drug companies $32 billion over the next decade. It would have been helpful to inform readers that this is less than 1 percent of projected spending on prescription drugs over this period.

Comments (8)Add Comment
written by izzatzo, September 21, 2010 6:53
The doughnut hole was designed as a "market shock" to remind freeloaders on socialist medicine of the true cost of health care. This innovation sends a clear message that health care and drugs are not free, the moral hazard of overconsumption must cease and claims to the contrary are patently false.

While a few socialists have managed to leapfrog the hole with add-on policies, most have been trapped by the hole and forced to face the true competitive prices that made America strong.

Those who make it through the hole will be known as the next Greatest Generation, made whole by the hole, extended by the kindness and generosity of struggling pharmaceutical entrepreneurs everywhere, who will become unemployed if the hole is closed by even more socialism.
written by Queen of Sheba, September 21, 2010 8:26
Since when does the HCR plan's closing the doughnut hole cost the drug companies anything? In order to close the hole, the government will subsidize drug costs for patients who reach the threshold, and there are no limitations in the plan on the prices charged for the drugs.

Maybe I have this wrong, but I thought the 50% discount on drugs would be made up to the drug companies by payments from the government, but according to the WaPo article I'm incorrect. Luckily the drug companies have found a way out of the necessity of giving a discount to buyers of their drugs: "There is legitimate concern that some manufacturers will steeply increase the price of drugs in order to offset the cost of the discount to the manufacturers at the expense of both consumers and the Medicare program itself," the Center for Medicare Advocacy and the Medicare Rights Center said in a letter to the agency that oversees the federal health insurance program.

Nice to know the drug companies haven't aren't being forced to compromise their rapacious greed.
Pitty the poor drug companies
written by rap1950, September 21, 2010 12:36
Lets see, competitive prices that made America strong: Its illegal to buy drugs from Canada (lower prices through competition), and its illegal for Medicare to negotiate lower prices based on volume as does the Veterans Admin, Kaiser Perm, BC/BS and so on. And when was the last time you negotiated a lower price for meds from your local pharmacy?

This is socialism? This is the free market? I don't think so. As for "pharmaceutical entrepreneurs" - more money spent on consumer advertising then research, R&D funded by the Feds and profits to private industry, drugs developed and tested in Europe then marketed and sold in US at insane markup.

How is HCR working out so far?
written by LJM, September 21, 2010 1:29
So far it looks like the insurance companies and big pharma are making out like bandits. One person might be able to keep their 23 year old on their insurance, but another finds out how much it costs to do so and can't afford it. That's probably another aspect of insurance companies making out like bandits. The cost of insurance for the 23 year old for the family plan is so much higher than when he was a 21 year old and still in college. Same person. No change in health, just a new way for the insurer to gouge people. Did they really think that without a public option, but mandating insurance something fair was going to happen? As for the Republicans wanting to dismantle the HCR law, does anyone believe the insurance companies and big pharma will let them? It's the law they wanted. It's good for them. It's not about the people who need coverage and access to care.
written by The Rage, September 21, 2010 3:27
Sorry LJM, but the "HCR" law is useless. Who cares if it is repealled or not. The HC insurance companies don't care nor did they want the law in the first place.

You obviously don't get it. No HC reform has happened.
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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.