Comments on: What Does “Negotiate” Mean in this Context?

By: DaveJ

DaveJ — Tue, 16 Jan 2007 18:46:21 +0000

Another thing to consider about drug prices in the US vs Germany is the relative probability of a $100,000,000 judgement (or 1000 of them) in each country. The drug price has to cover the liability insurance.

The first time Pfizer has to pay that kind of money to a reimported drug user in the US, foreign patients in the reexporting country are going to start paying more for drugs. We'll be exporting our wonderful liability laws.

By: Ian Random

Ian Random — Tue, 16 Jan 2007 06:05:20 +0000

Actually, the $600 hammer cost $15, to ease the accounting they allocated overhead evenly. So cheap things were expensive and expensive things were less so. Kinda like other things in accounting where you use the last price for something, no matter how much lower or higher it is compared to inventory you bought earlier. I do think there is room for more competition in contracts, by lowering the regulation bar, so smaller firms without fulltime redtape staffs can bid.

As for the drugs, yes it will be a fiasco, look at the role of government prices for flu vaccine and how they are produced in England now. They looked at $1/dose versus $1,000,000’s in liability and made a decision to discontinue. I am so close to losing sympathy for older folks, it is hard not to see SOME as greedier than a stockbroker with a filing cabinet of failure to delivers.

A Hammer Story:
http://www.govexec.com/dailyfed/1298/120798t1.htm

A Vaccine Story:
http://www.weeklystandard.com/Content/Public/Articles/000/000/004/793dgqvs.asp

Ian Random

By: Don Lloyd

Don Lloyd — Tue, 16 Jan 2007 05:13:48 +0000

Warren,

"...Already most of the world pays just above marginal cost for drugs, such that we in America pay for most all the drug R&D that occurs (a form of charity we never get credit for)..."

True, but contrary to popular belief this doesn't represent an economic injury to Americans, only an increase in blood pressure to those who read about it and don't understand it. As long as Congress doesn't mandate drug re-importation and destroy beneficial price discrimination, it's a small plus, given that we have little chance of convincing other countries (or even ourselves) that markets outperform price controls over the long run.

Regards, Don

By: Valens342

Valens342 — Tue, 16 Jan 2007 04:37:20 +0000

Finally someone notes the fact that all these ’successful’ socialist medical plans have been able to continue along (albeit rather poorly if the facts be exposed) because the U.S. has been subsidizing them… Oh, and we also provide all the actually effective defense spending for them as well in the form of the U.S. military. Socialism: The Road to Serfdom (though it may take a bit longer if you can continue to suck off the United States’ economy. Haven’t any of these left wing brainiacs learned that price fixing (as noted in the first comment above) has the reverse effect intended with disatrous ripple effects throughout the economy?

By: Matt

Matt — Tue, 16 Jan 2007 03:33:16 +0000

The government passes laws against selling to nongovernmental buyers at a price below what the government pays...the $6000 hammer-type incidents happen because nobody but the military would buy a MilSpec hammer, and a hammer that doesn't meet the contract specifications is not considered to be the same product.

So I'd bet against Medicare paying more for drugs than people who buy them with non-stolen money. But that _would_ almost certainly lead to the race-to-marginal-cost that any sane person is worried about.

The only plausible good outcome is that the wave of stagnation and insolvency the changes will cause could lead to some other government barriers to the pharmaceutical business (such as the baroque FDA approval process and our insane tort system) being removed as an emergency measure.

By: Skip Oliva

Skip Oliva — Mon, 15 Jan 2007 19:38:28 +0000

If the drug price negotiations work the same way as provider negotiations, Medicare will demand the "lowest" price for a given drug, which means it will be a crime for any private payer to obtain an even lower price. Regulators will then use the regulated price as the "market" standard and bring price fixing lawsuits against any drug producer that tries to negotiate prices with private payers that are too high above the Medicare "negotiated" price. This is what has already happened with physicians.

This isn't like the $6,000 hammer. The government doesn't care what private firms are paying for similar hammers. Here, the objective is to control all prices within the market.