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May 14, 2009


Steve B.

Deb I'm beginning to question if u truely do have an understanding of sound business principles/ the REAL economic cause and effect of legislation. Hate to break it to you but that 2007 House Bill on medicare that got blocked wasn't all that great. If you overgeneralize and only look at the surface, sure I can see how it appears that preventing price negotiation seems counter intuitive but if you operate in the real world eg... the details of the bill/ the real world consequences of it I doubt you'd chalk it up as another "good" bill for the Dems.

What you failed to realize/research/ or just flat out ignored is that independent analysis from the Congressional Budget Office found that the 2007 proposal would not result in cheaper drugs unless Congress tweaked the program, likely creating less access and choice for beneficiaries. If government was directly involved in the negotiation of drug prices they could only force lower prices through practices like price ceilings, reference pricing, or reimportation.

Even though I'm only 23 even I know that price ceilings when set below the market equilibrium rate (which is what govt would surely do in the name of helping the people) create a situation where demand exceeds supply hence shortages. The same thing happened in the 80's when Carter tried to apply the same principle to gas prices. As far as reference pricing is concerned it gives more incentive to the generic companies that copy a drug than the companies that originally innovated them, in the long run that creates a situation that cuts into drug company profits thus weakening their incentive to put newer innovative drugs on the market. As far as reimportation is concerned part of the reason prices are higher in the US is because it's the only place drug companies are getting close to market prices for the high demand level we have. Reimportation essentially piggybacks off the socialist price policies of other nations that have actually worked against many consumers. Drug companies have begun pulling their drugs from pharmacies in Cananda because at such low prices it simply isn't profitable. In other countries they would leave if it weren't for the fact that compulsory license allows those governments to steal their patents if they aren't locally produced, so they are forced to take the hit. In essence from the perspective of the producer the price for success is martyrdom.

I don't think generic drug companies should be given further incentive at the expense of the real innovators but much of the cost associated with drug prices is the fact that some medicare recipients simply don't get the generic of older drugs that have been out for a while thus voluntarily paying more to get the same thing. Of the seven top-selling prescription drugs for chronic disease, six generic US versions cost significantly less than their Canadian equivalents (FDA 2003). A Canadian study of 27 top-selling generic prescription drugs concluded that three-fourths of those drugs cost less in the US, and Canadians could save millions by access to the US versions.

So in essence supporting that bill is supporting low prices in the short run at the cost of shortages, restricted access, and less innovation....How American of you

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