Prescription Pricing
When the next Congress takes office in January, the Democrats will have a majority in both houses. What is the most constructive action they can take? I suggest they start by modifying the rules for Medicare Part D, the prescription drug benefit.
Q1. How does Part D work?
A. Every American over 65 years old has the choice of a wide-variety of insurance plans that pay for prescriptions, including managed-care plans. Medicare pays most of the cost of these plans.
Q2. Since the Government pays for the medicines, can it negotiate lower prices from the pharmaceutical companies?
A. No, Republican congressmen, many of them recipients of massive campaign contributions from pharmaceutical PAC's, inserted a provision in the bill specifically prohibiting Government officials from doing so, over Democratic objections.
Q3. Should the Democrats use their new majority to repeal this language?
A. Yes. Negotiated prices could save more than $40 billion per year. (1)
Q4. Would President Bush sign a bill that would reduce pharmaceutical profits?
Even if he signed it, would his appointees really negotiate for price cuts?
A. My guess is he would sign it, but issue a "signing statement" saying that he would not use the authority to seek reduced prices. But his successor probably would, so it is still worth passing.
Q5. Would lower drug prices remove a needed incentive for pharmaceutical firms to research and develop new medicines?
A. Most valuable research and development of new medicines already takes place under Government auspices, typically paid for by grants from the National Institutes of Health (NIH), not in private-enterprise labs. (1)
A great deal of lab work at pharmaceutical firms is devoted to modifying existing profitable drugs, whose patents are expiring, into new versions that can be patented. The most profitable drugs are those aimed at common conditions (obesity, high blood pressure, high cholesterol, sleeplessness, nasal allergies, etc.) rather than at more serious ailments that affect only few patients.
Drug companies often cite their huge expenditures for research, but seldom mention that they spend even more on marketing and advertizing.
Q6. Many TV ads say "Ask your doctor if Product X is right for you."
What does this mean?
A. If your doctor prescibes your medications on the basis of a TV ad, it means you need a new doctor.
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(1) "Private Lesson" by Jonathan Cohn in the November 20, 2006, issue
of The New Republic, page 17.
Q1. How does Part D work?
A. Every American over 65 years old has the choice of a wide-variety of insurance plans that pay for prescriptions, including managed-care plans. Medicare pays most of the cost of these plans.
Q2. Since the Government pays for the medicines, can it negotiate lower prices from the pharmaceutical companies?
A. No, Republican congressmen, many of them recipients of massive campaign contributions from pharmaceutical PAC's, inserted a provision in the bill specifically prohibiting Government officials from doing so, over Democratic objections.
Q3. Should the Democrats use their new majority to repeal this language?
A. Yes. Negotiated prices could save more than $40 billion per year. (1)
Q4. Would President Bush sign a bill that would reduce pharmaceutical profits?
Even if he signed it, would his appointees really negotiate for price cuts?
A. My guess is he would sign it, but issue a "signing statement" saying that he would not use the authority to seek reduced prices. But his successor probably would, so it is still worth passing.
Q5. Would lower drug prices remove a needed incentive for pharmaceutical firms to research and develop new medicines?
A. Most valuable research and development of new medicines already takes place under Government auspices, typically paid for by grants from the National Institutes of Health (NIH), not in private-enterprise labs. (1)
A great deal of lab work at pharmaceutical firms is devoted to modifying existing profitable drugs, whose patents are expiring, into new versions that can be patented. The most profitable drugs are those aimed at common conditions (obesity, high blood pressure, high cholesterol, sleeplessness, nasal allergies, etc.) rather than at more serious ailments that affect only few patients.
Drug companies often cite their huge expenditures for research, but seldom mention that they spend even more on marketing and advertizing.
Q6. Many TV ads say "Ask your doctor if Product X is right for you."
What does this mean?
A. If your doctor prescibes your medications on the basis of a TV ad, it means you need a new doctor.
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(1) "Private Lesson" by Jonathan Cohn in the November 20, 2006, issue
of The New Republic, page 17.
posted by Gerald S Glazer at 10:34 AM
1 Comments:
Q2, Yes they did but why? See answer to Q3. PAC's of all sorts give money to both Democrats and Republicans. Any suggestion that PAC's favor one over the other is false.
Q3. This is conjecture and in the long run would increase the cost of drugs.
Why is the cost of airline tickets relatively low historically or otherwise? Why is the cost of food low? Why is the cost of most of the things we buy relatively low? Why is the cost of milk relatively high? Look at the cost of goods and then ask yourself which item or service has cost controls on it?
The facts are that competition lowers prices. The Democrats want our government to set prices of drugs, the Republicans want the market place to set prices. History has shown time and time again for hundreds of years all over the world that price controls result in higher prices and the free market results in lower prices.
Q5. This is false and I am a government funded medical researcher.
Government funded labs do basic research, they do not do pharmaceutical research. Government funded labs determine the chemical mechanism of biology; but it is the pharmaceutical companies which take this basic knowledge and actually create a useful drug out of it.
Name a drug and it was created by the pharmaceutical industry not government labs. For example government labs discovered the chemical mechanisms for acid production by stomach cells; but it was pharmaceutical industry that created a drug that could be used in humans to cure acid reflux induced esophagitis, e.g. Prilosec.
I do not know of a single drug used today by humans that was discovered by government funded research.
Drug companies do spend an inordinate amount on advertisement; but so does the automobile industry and tyhe soft drink industry. This is the nature of business in the 21st century and the pharmaceutical industry is an industry.
It is interesting that Mr Glazer does not point out all of the great contributions the pharmaceutical industry has made to the lives of every human being on earth with its numerous life saving drugs and drugs that help humans live a happy and productive life. I depend on asthma drugs that were created by the pharmaceutical industry and I have many friends and relatives that are alive today because of the pharmaceutical industry whether they have heart disease or cancer or colitis or whatever.
Mr Glazer mentions that the pharmaceutical industry makes a lot of new drugs by modifying old ones; but fails to tell you why. The pharmaceutical companies get ONLY a 10 year patent on their discoveries that they spent billions on. At the end of 10 years there are dozens of generai pharmaceutical companies who will produce the drug at much lower cost ending their profits on this drug. In addition, these very same generic drug companies, like TEVA, spend hundreds of millions of dollars on lawyers whose only function is take the pharmacetical companies to court to attempt to prove that the patent on their drug is null and void. Drug companis alter the drugs so that they can lengthen their patent time for the drug. They would not need to do this if not for the generic companies. This is simply good busieness practice in a very competitive market place and they are doing nothing that other industeries do not do.
Mr Glazer seems to think that high blood pressure, obesity, and high cholesterol are "commion conditions" and therefore not "serious ailments' yet all of these can kill you by causing heart disease or stroke and do kill millions every year in the USA alone.
Q6. No doctor prescribes drugs based on TV ads.
The purpose of the TV ads is to alert the viewer to diseases and disease symptoms and to the fact that many diseases have drugs that work. Theese ads are to alert viewers to symptoms that they may have and for their doctor to determine. The drugs in mentioned so that the patient hopefully will ask for the brand name rather than the generic if available.
Branding in all industries is the best way to sell products in all indiustries and these add are nothing but branding attempts; e.g. The Purple Pill, Prilosec.
I am sorry the Mr Glazer has to resort to distortion of the facts and providing an wholly incomplete analysis to wrongly denigrate a well respected industry that has given us so much. I hope Mr Glazer never needs the products of the companies he so much dislikes. denirgates.
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