Tuesday, March 16, 2010

Pharmaceuticals to push Obama-Care

Politico: "The drug industry, which has held off running ads until officials sign off on the final reconciliation bill, is growing more comfortable with the emerging legislation and is preparing a substantial pro-reform ad buy in 43 Democratic districts, according to a senior industry source. The amount and timing of the buy have not yet been set and hinge largely on action in the House. Still, the development is a substantial step forward from Monday morning, when industry officials, coming off a tough weekend of negotiating with Democratic staffers, said there were no ads in the works. The movement should also help appease the White House, which has been leaning on the industry to provide Democrats air cover, according to industry sources."

History has witnessed this before, and it appears my generation will see this again.
When government muscles in on the private sector to improve things, only the biggest players in the market benefit. The Railroads and Airlines are beacons of warning in this regard.

Why would the drug companies be in favor of this kind of legislation?
A. They can set prices without competition. In the market place where a motley assortment of customers demand medication, there is at least a modicum of price competition. Reduced though it may be because of patent legislation, it is by far superior to a single payer government system. What this boils down to, do we want to pay through the ears in taxes for medication, or have some competition in drug prices?
B. With a government take over comes stalled innovation. Why spend money on Research and Development when a single payer does not demand it? Even if there is demand, there is no incentive to improve upon medication, because the wheels of federal bureaucracy move slowly, and the contracts are not fluid.

In essence, legislation like Obama-care is a gold mine for Pharmaceuticals. They can charge more for existing medications, and avoid the expensive and risky proposition of further research.

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