Getting the Government to mandate pricing may seem like a good thing in the present or short term but it crimps future activity later. Like this:
- Did the pharmacy decide that her meds would be this month’s “loss leader”?
- Did the distributor find a better way to move products from inventory to his customers?
- How about the manufacturer – did they discover a radically new process to cut the price to the distributor?
- How about their prices from the precursor manufacturers – what changed?
- How did the price go down by 81% in one month?
The tweet says it all – thanking Trump. Who, by the way, just happened to march himself into the Marketplace and fixed the pricing. No, that’s not the traditional way of “making something work,” but use the force of government to set a price to what the Government wants:
President Donald Trump signed four executive orders on Friday aimed at lowering the cost of prescription drugs, the first of which, he says, will lead to the cost of insulin dropping to “just pennies a day.”
“The four orders I’m signing today will be on the prescription drug market in terms of pricing and everything else to make these medications affordable and accessible for all Americans. The first order will require federal community health centers to pass the giant discounts they received from drug companies on insulin and EpiPens directly to their patients. You know insulin became so expensive people weren’t able to use it. They desperately needed it,” he said.
“We have it to a level that you’re not going to believe. EpiPens – likewise you have been hearing horrible stories about EpiPens over the last six or seven years, horrible, horrible, horrible increases for where they went to almost nothing to massive amounts of money. We’re changing that right now,” the president said.
“These providers should not be receiving discounts for themselves while charging their poorest patients massive full prices. Under this order, the price of insulin for affected patients will come down to just pennies a day, pennies a day from numbers that you weren’t even able to think about. It’s a massive cost savings,” Trump added.
The second executive order “will allow states, wholesalers, and pharmacies to do something other politicians have promised for decades and decades but never done .. allow the safe and legal importation of prescription drugs from Canada and other countries where the price for the identical drug is incredibly lower.”
“It is a difference like you would not believe – 70%, 80%, 90%. 30% – but massively lower than the identical drug made in the same plant, same factory, same exact drug, same everything, same box, same pill, and yet, it’s 50, 60, 70% lower,” the president said.
…Under the executive order, Medicare will be required to buy drugs at the same price that other countries pay,” Trump said
The tweeter is ecstatic – she gets a much lower price for now. Trump “appears” to be a “Man for the little man” in forcing evil corporations to bend to his will. Everybody’s a winner, right? No.
TANSTAAFL. Somebody has to pay and pay good and hard.
Sure, everyone throughout that supply chain MIGHT be able to survive a 60% cut, a 70%, or even an 80% cut IF the underlying cost functions support them. If so, that profit margin is going to be razor-thin – to the point of surviving, not thriving. Staying in place and not expanding. Without expanding, the little people in that supply chain have no way to improve their lot in life.
But that’s the small cost. When you radically re-order the pricing, what will the pharmacological companies do for future R&D? It is a very expensive process from identifying a need, figuring out what molecules are needed to address the problem, and the time and expense to do that. Then the real costs kick in – trials of the new drugs and many of them never pan out.
This means that Americans are funding the enormous cost of drug research and development for the entire planet. We are bearing the entire cost of all of this. They are bearing none. They say that this is what we are going to pay. In some cases, it’s the socialist country. So we are paying to reduce drug prices in a socialist country. How does that work?” the president said.
Under the executive order, Medicare will be required to buy drugs at the same price that other countries pay,” Trump said.
I generally am in favor of a lot of things that Trump does (not what he says at time, but his actual actions) – this is not one. Yes, we are paying for that research – and it has undeniably made millions of lives either better or saved them outright. Now, take that money away that paid for that research – what do you THINK is going to happen?
Yep, R&D is going to be scaled back big time. There will be no more “taking a flier” on something. There will be no looking into helping those with “orphan diseases” – the fringe ones that have so few patients there is no market to pay for that research. The bean counters will take charge and what future drugs will never see the light of day because of the expense?
Sure, current drugs may get cheaper but the drugs we might need later for some other diseases will never be created. And that will be a high cost indeed.
So, the Tweeter may be happy today but if the circumstances change, that pipeline may be all but empty when the need arises. Bupkis.
Trump may reap some electoral benefit – but at the price of doing the “Democrat giving you free stuff” two-step?? He’s done a lot right – this ain’t one.
