Entitlement Mentality of Healthcare

« on: July 11, 2004, 04:47:42 PM »

Old Major

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Government needs to battle drug companies
Saturday, July 10, 2004

The Dispatch recently ran an article headlined "Wary Canadians quit prescribing drugs for Americans." This article caused my anger and frustration levels to reach a new high.

A number of my acquaintances buy drugs from Canada because they are so much less expensive, and I am tempted to do the same. We Americans are being ripped off by the drug companies with the complicity of the U.S. government.

The Canadian government has found a way to obtain fair prices from the drug manufacturers, where there is still profit even at reduced prices. If this were not so, the drug companies would have stopped selling in Canada long ago.

The Canadian market is only about 10 percent of the U.S. market, and the loss of it due to unrealistically low prices established by the Canadian government would hurt but would not be catastrophic for the drug companies. In that case, the drugs would flow from the United States to Canada.

I repeat, the American people are being ripped off by the drug companies, with the complicity of the U.S. government. The Canadian, Mexican and most European governments have negotiated reasonable prices from the drug companies.

The recent Medicare drugbenefits law actually forbids the U.S. government from negotiating for lower prices from the drug companies and, therefore, our drug savings come out of the U.S. Treasury.

Eventually we pay for the drug savings with tax money while the drug companies’ profits are protected.

Why has the U.S. government allowed this to happen? The reason is quite clear to me: The drug companies have the U.S. politicians in their back pockets, due to a combination of campaign contributions and a pro-business (damn the little guy) conservative political philosophy.

At the present time, there is a reluctance on the part of our Congress to enforce laws on the books that make it illegal to import drugs from Canada because of the furor it would cause from the Americans who depend on the low-cost Canadian drugs.

The drug companies may have found a less-direct way to stop the flow of low-cost drugs into the United States, by applying pressure on the insurance companies that provide medical-malpractice insurance to Canadian doctors who rewrite prescriptions so that the prescriptions can be filled in Canada.

The Food and Drug Administration recently stopped and searched a busload of American citizens returning from Canada with lowcost drugs. This incident was written up in the June 2004 issue of the AARP Bulletin.

It appears that intimidation is being used to achieve what the government is afraid of doing directly. The American people will be held hostage by the drug companies until the U.S. government intervenes on the people’s side, instead of on the drug companies’ side.

I urge readers to write to the president and to legislators, explaining how they feel about the high drug prices. Tell them Americans want fair drug prices, as the Canadians have.

If the readers do not know how to contact the president and the legislators, the local public library reference service will provide this information.

KENNETH M. POVENMIRE

Columbus

http://www.dispatch.com/print_template.php...0710-A7-00.html


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Entitlement Mentality of Healthcare

« Reply #1 on: July 11, 2004, 05:50:46 PM »

Old Major

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Government needs to defend Drug Companies’ Patents

In the Dispatch letter to the editor “Government needs to battle drug companies” (Saturday, July 10, 2004) Kenneth M Povenmire outlined the dangerous, fallacious, and criminal basis of the entitlement mentality. In the letter Ken states “A number of my acquaintances buy drugs from Canada because they are so much less expensive, and I am tempted to do the same. We Americans are being ripped off by the drug companies with the complicity of the U.S. government. “ Ken misses the point here, it isn’t a coincidence that the drugs they are buying in Canada are AMERICAN manufactured drugs. The Canadian drug industry is almost non existent, and their socialized healthcare system relies of the US subsidizing it by allowing for cheap importation of AMERICAN drugs. Drug companies risk on average 800 million dollars to bring a drug to market, and much of the patent protection lapses while the drug is attempting to get FDA approval. I fail to see how investors risking huge sums of money in order to help improve the lives of sick patients are “ripping” Americans off. I would rather have the ability to pay $500 for a drug that will prevent a $50,000 heart surgery then not even have the drug exist in the first place. These new drugs don’t simply grow on trees; they are developed at tremendous financial risk.

Ken’s statement of “The Canadian government has found a way to obtain fair prices from the drug manufacturers, where there is still profit even at reduced prices. If this were not so, the drug companies would have stopped selling in Canada long ago,” demonstrates an extreme and disturbing ignorance of economics. There is nothing “fair” about a government monopsony/single buyer concentrating its market power to essentially violate a US Company’s patent. Canadian drug companies did stop selling in Canada a long time ago; they went bankrupt because Canada does not pay a profitable price for its drugs. American companies continue to sell to Canada because a little of something is better than all of nothing. Canada pays well below the average total cost of a drug which includes the R&D expenditures and other fixed costs, but they do pay above the marginal cost of the drug, which is the variable cost to actually produce an additional tablet. Basically Canada pays more than the ingredients in the drug, but not much towards its development.
Ken continues, “I repeat, the American people are being ripped off by the drug companies, with the complicity of the U.S. government. The Canadian, Mexican and most European governments have negotiated reasonable prices from the drug companies.” If this was such a wonderful approach, these countries wouldn’t be dependent on US drugs.
Ken then highlights his entitlement mentality; “the recent Medicare drug benefits law actually forbids the U.S. government from negotiating for lower prices from the drug companies and, therefore, our drug savings come out of the U.S. Treasury.” Ken seems to forget that drugs and their patents are PRIVATE PROPERTY. It is the roll of the Government to protect, not violate US Patents. The Government should never be used as a tool to disrupt the free market system, and seize private property from one group and give to another. If the Government and Ken want to provide cheap drugs, let them develop and produce them.
Ken then points out that “eventually we pay for the drug savings with tax money while the drug companies’ profits are protected.” What drug savings? Just because a government program exists the Drug companies have to reduce their prices? Why shouldn’t the government have to pay market prices? Wasn’t America founded on the principles of individual rights, freedom and limited government? Does Ken believe that our founding fathers would have approved of the Government being used as a Marxist tool to undermine our Capitalist principles that make the drugs available in the first place?

Ken then makes his biggest mistake; “why has the U.S. government allowed this to happen? The reason is quite clear to me: The drug companies have the U.S. politicians in their back pockets, due to a combination of campaign contributions and a pro-business (damn the little guy) conservative political philosophy.” It is not the drug companies that have the US politicians in their back pockets, it is the Constitution and free market principles. Drug companies are no different than any other company, and have the right to develop and patent their products. Remove that protection and there will be no new drugs. I find it hard to believe that the “little guy” will benefit from not having any new drugs developed. Case in point is the AIDS vaccine. Most drug companies have stopped research on one because of the threat that countries would simply ignore the US patent “for the greater good.” These countries prefer to have all of nothing rather than a little of something. While an AIDS vaccine would undoubtedly be expensive at first, it would eventually go off patent and the prices would plummet. But because of their short sighted view, research has been stopped on the AIDS vaccine and until some government or charity develops an AIDS vaccine one will not, and may never exist. Protect an AIDS vaccine patent and you would have a whole lot more effort being placed on solving this horrible illness. We should what these corporate angles to make huge profits because hugely profitable drug companies make more hugely profitable drugs and spend huge amounts on solving today’s health problems so we can all live better. Bankrupt drug companies don’t develop new drugs, they don’t solve health problems, and they don’t make our lives better.

Robert Martin


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Entitlement Mentality of Healthcare

« Reply #2 on: July 11, 2004, 06:20:59 PM »

dain

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I've often thought that the whole problem starts with governmentally-subsidized medicine. In the past (before Medicare), there was a true market for medicine...demand (i.e., the ability to pay) controlled both supply and cost. What happens is that subsidies force greater demand, which allows those who control supply (doctors, hospitals, pharmaceutical companies) to charge more. If we didn't subsidize drugs, then companies would be faced with real constraints on what could be profitably developed.

So...that which has "supercharged" research and development also places great strain on the "system" (i.e., the system of subsidies) to keep up with ever-growing production costs. The bottom line is that the current system of subsidies has led to real progress in the development of pharmaceuticals, medical technologies, and so on, but at the cost of creating a medical industry that is artificial and unsustainable. It is not a true market, and as a result it threatens to gobble up ever-more social surplus at declining rates of return.

Housing is a similar story...prior to WWII we were a nation of renters, but the advent of 20 and 30 year mortgages (again, a Federal intervention) allowed millions more people to "afford" housing. It also created a nation of debtors and led (and is leading) to hyperinflation of real estate prices.

Seems to me that we need to inject more market and less subsidy in these systems, but it will have to be ratcheted down VERY slowly. Of course, Bush's drug bill was exactly the wrong thing to do...it will ultimately create better drugs, but at the price of greater governmental dependency AND the withdrawal of capital from other segments of the economy (thanks to taxation).

Thoughts?


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Entitlement Mentality of Healthcare

« Reply #3 on: July 11, 2004, 06:32:48 PM »

Old Major

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Couple of solutions:

1. Eliminate taxation on Corporations, especially Drug Companies. Tax at the Dividend level only.

2. Make FDA approval optional. Promote a private sector quality control organization like the Underwriters Laboratories (UL).

3. Tort reform so that drugs that save millions but harm a few are protected. Every year a few people develope Polio due to the vaccine, but millions are protected. That must be an acceptable cost.

4. Allow US drug compaines to form cartels for international sales, anti-trust laws still apply for domestic market.

5. Vigorous enforcement of US patent protection. China just violated the Viagra patent.
http://news.bbc.co.uk/2/hi/asia-pacific/3875673.stm


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Entitlement Mentality of Healthcare

« Reply #4 on: July 12, 2004, 03:23:34 PM »

MarathonMan Offline

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Bottom line is that somebody, somewhere needs to come up with a solution to this situation. It's a P.R. nightmare for the pharmaceutical companies, so there must be a way to pull it off.

Being a simpleton, and not very knowledgeable about the subject, a simple solution seems self-evident. The drug companies do projections of sales in various markets around the world, I'm sure. Armed with that knowledge, as well as their development and other costs, why can't they figure out how to lower costs to Americans and increase them to the international community where appropriate.

That the Canadian government buys them all, and gets a volume discount I take it, just quit doing it. Make them pay the same price that Riverside Hospital or your family doctor pays for the drugs. If they did so, they could drop domestic prices and totally eliminate this line of reasoning for villifying the pharmaceutical firms. And Americans would all benefit from the result.

Sounds too simple to this simpleton not yet to have been remedied. What precludes us from doing something of this nature?


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Entitlement Mentality of Healthcare

« Reply #5 on: July 12, 2004, 03:46:54 PM »

OldWine

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An additional item to list with AdamSmiths suggestions:

That the President REPEAL his predecessors EO that overruled the FDA and ALLOWED Drug Companies to advertise their prescription drugs to the general public.

Just stop and think for a minute... who do YOU think is PAYING for all that advertising? If you believe it's the drug manufacturers paying for it out of their profits, you have a serious deficiency in your understanding and comprehension of the Free Market System.