by Jean Taylor
We’re currently seeing a spate of stories about the crisis of high prices for pharmaceuticals, and that should make consumers and voters wary. We all should remember Rahm Emanuel’s admonition to never let a crisis go to waste. Unfortunately the solution to crises just happens to be more and more government intervention which, government being as it is, ultimately leads to a worse outcome than the original problem. And the crisis of high drug prices will be no exception.
Take the Vox article as an example. The reason credited with responsibility for high drug prices is the fact that the US government cannot negotiate drug prices. Many other countries around the world do negotiate drug prices, and their costs are lower. Therefore the solution to high drug prices is to put bureaucrats in charge of negotiating with the pharmaceutical companies.
It doesn’t take a whole lot of reflection to see where that will go. If the cost of a medication is too expensive, the bureaucrats will have no problem forcing the drug to be sold below cost which will eventually cause producers to stop supplying that particular drug. This has already happened with several inexpensive generic drugs used in cancer treatment. Or perhaps more likely the bureaucrat will determine some other formulation to be just as effective as the more expensive drug, and so permit coverage only of the cheaper version. Bear in mind the FDA and insurance companies insist that generics are identical to name-brand medications, but the FDA permits generic drugs to contain anywhere from 80%-125% of the active ingredient in the name-brand version. Only a bureaucrat could say, with a straight face, that 80% is identical to 100%. Fortunately bureaucrats are known for their lack of a sense of humor.
The crisis of high drug prices is set to be used like all other crises, and that would be to expand centralization and government power. Ordinary people are never, ever well served by centralization, but the top of the economic pyramid grows fat on it.
The true reason for high drug prices is our irrational health insurance system, but that’s a topic for another column.