Monday, February 11, 2008

Small part of the solution

Healthcare and perscription drugs.

Why are Canadian drugs cheaper? We're told that it's because they negotiate a cheaper rate with the pharma companies. Assuming that's correct, here's what we do. Starting with Medicare and Medicaid and assuming there's some national health insurance plan.

Unless we get the cheapest price you sell it for, we won't buy it. We'll buy older off-patent generic drugs.

Patients are free to pay retail if they want the new shiny antihistamine or dick pill or whatever. Patients will demand that doctors will do a better job of explaining features, side effects and benefits of the various treatments available and the customer will make an informed decision.

But more importantly, the drug companies will change their behavior. They will stop charging the US a premium to make up for their losses overseas. The price for the drug will be the price of the drug all over, people will pay what it's worth.

The golden goose of the rich, insured US customers paying for all the R and D, and the rest of the world benefiting from it will be gone.

Also gone will be drug R & D that leads to drugs that aren't actually more beneficial, but that are just different enough to qualify for a new patent. And ALSO gone will be the presumable pressure of the companies to delay release of actual improved drugs because it will harm their older drug's cash flow. It seems like more than coincidence that extended release versions of drugs appear on the market right around the same time the old one is going off patent.

More importantly, it seems to be the most free/libertarian solution to the problem. We're not telling anyone not to do anything. We're just taking our dollars elsewhere if we don't get a price they are already charging someone else. If the effect of that is to raise prices for elsewhere, well fine, that's the marketplace.

Thoughts? Pitfalls?

(An exception would be for free or subsidized drugs for countries in a natural disaster or blight state. Like anti-malarials and AIDS drugs.)


At Friday, February 15, 2008 1:00:00 PM CST, Blogger cljo said...

A few thoughts:

1. You've just pissed off the entire developing world. The prices have to go up there.

2. "You mean the national insurance in the best country in the world won't pay for the newest and therefore most effective drugs?!" Good luck with that in Congress.

3. You're essentially regulating away price-discrimination. I don't like that precedent. Of course, its rare for a consumer to have enough market-power to do such a thing.

4. I follow your argument that this will result in less R&D, but how does it guarantee that the R&D is spent on "more beneficial" drugs. Wouldn't the companies just play it easy?

At Friday, February 15, 2008 6:33:00 PM CST, Blogger gc said...

1. Let them start their own drug companies. But seriously, if we want to help them, we can give them money to buy the drugs. Let our foreign aid be reflected as such.

2. I agree. But they can suck it.

3. What good is there in price discrimination? Just that it restricts the rights of business?

4. The way I looked at it was that there would still be competition between the drug companies. They'll have to innovate better drugs because people won't stand for paying top dollar for a fancy logo, especially when the other guy might come up with something better. They WILL pay for products that benefit them.

4b- I haven't really accounted for the paradigm shift sort of drugs, the instant wonder drug that might come next year.

It just makes me sick, is all. The current free market solution isn't working.


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