QDIS Blog

Much has been written recently about the issue of the government being able to negotiate with drug companies for prescription drugs covered under Medicare. Here are just a few of the recent articles.

Drug Industry Is on Defensive as Power Shifts - New York Times
On drug prices, are Democrats in a fix? - Los Angeles Times
Why Medicare Drugs May Be Sticking Point - WSJ.com (free content)

Some argue that by allowing the government to negotiate you limit the number of drugs that will be covered. I don’t know that I agree with that. In cases where there are many drugs, which is the case for the most prescribed drugs such as statins there will be competition. In cases where it is the only drug to treat a given disease, the prices will be higher but that is understandable., When you have something unique in the market you should be able to demand a higher price.

However, healthcare just like energy are not the same as other products in the free market and I don’t necessarily believe those rules apply. That’s because regulations are already in place and the fact that for drugs, the rest of the world has price controls, means that it isn’t a free market. I also think the chances of the US convincing the rest of the world to come over to our market of drugs is impossible. Therefore, we have to come to some sort of decision on where we go from here and the status quo is not the answer. I don’t claim to have an answer myself and it will be interesting to see how this issue develops in the next year or so.

Technorati Tags: drug cost, drug price

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