Dazzling Knowledge

Sunday, December 03, 2006

Democrats eager to "fix" prescription drug benefit?

At Reason, Katherine Mangu-Ward speculates on what the new congress will be up to. This part scares me:

3) "Fixing" the prescription drug benefit. When the Republicans passed Medicare part D, I—like many libertarians—despaired of the GOP. The only thing worse than a massive new entitlement ushered in by Republicans? A passel of aggressive Democrats promising to "fix it." By allowing Medicare to negotiate for lower drug prices with pharmaceutical companies and permitting more importation of pre-price controlled drugs from Canada, Democrats will add another command-and-control component to our already monstrosity of a health care system.There's the old familiar song and dance about how if you decrease Big Pharma's prospective profits on new drugs, they will (reasonably) retaliate with less spending on research and development. According to the author of a new study from the Manhattan Institute: "Prices would be driven down by over 35 percent by 2025. The cumulative decline in drug R&D for 2007-2025 would be about $196 billion in year 2005 dollars, or $10.3 billion per year. Because R&D costs for new medicines are about $1 billion, the loss would be about 196 new drugs."But to really understand the havoc a Democratic "fix" could wreak, warily eyeball the Department of Veterans Affairs, which already negotiates for its drugs and has been cited by Democrats as a model for Medicare. At the VA, prices for drugs are very low. But one way that the VA keeps overall prices down is by making it tough to get new, expensive drugs. Their formulary includes about 1400 drugs, and they refuse to consider a drug for inclusion until it has been on the market for three years. Compare that with the 4,300 drugs currently listed at (the privately negotiated) Part D formularies. Right now, a third of VA seniors say they would rather be on Part D. If Dems have their way, at least these vets won't have to bother with the paperwork for switching.


And here's Johna Goldberg on the same issue:
Now that the Democrats have taken over Congress, they are promising to “fix” Medicare Part D by making it more government-run, more generous to better-off recipients, and much less profitable for those evil disease-curing drug companies. The hitch is that the current, supposedly disastrous plan costs much less than expected and seniors are overwhelmingly happy with it. Shocking, isn’t it? People like to get expensive stuff cheaper!Oh, and before I get grief about minimizing such a vital issue, let’s keep in mind that the greatest generation has a lot going for it, but a healthy aversion to statism isn’t one of them. In 2000, when the prescription-drug crisis was reaching a crescendo — Al Gore seemed to find old ladies who had to choose between pills and food everywhere he went — senior citizens were nonetheless the most insured Americans. All of them were entitled to Medicare, most had other insurance, and four out of five of them already had prescription-drug coverage by a third-party provider. Yes, some poor seniors needed help, but as a group, old people spent more of their money on entertainment (5.3 percent) than they did on drugs (3.2 percent). And yet the federal government refused to create a new entitlement to cheap Matlock DVDs.

2 Comments:

Blogger Chamomiles Davis said...

Interesting post, except for the part Jonah Goldberg wrote about "disease-curing drug companies." I happen to agree with Chris Rock's comment that drug companies do not want to cure your disease, because there's "no money in the cure"... they just want to figure out a way for you to live with it: "Damn, my AIDS is acting up again..."

4:56 PM  
Blogger Chamomiles Davis said...

Think of this in libertarian terms: most drugs:diseases what Welfare:poverty.

5:10 PM  

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