The Biden administration recently introduced another piece of their plan to lower prescription drug costs. Furthermore, HHS announced timelines for the government to negotiate on consumers' behalf. According to the new administrative guidance, talks with "high-cost" manufacturers will start in September, with setting prices on issue drugs following the year after. How many times do we have to see the scenario fail? Setting prices only means other prices will go higher. Is our memory so short that we've completely forgotten about the 60's and 70's? Is it not obvious that past price fixing has only made the drug companies more money, not less? After Obama care was implemented, every aspect of the healthcare industry, except the Doctors, made more money. The healthcare industry has become the most profitable industry out there, with the fewest number of competitors.
Biden is right — the cost of drugs in America is far too high; they are more than 2.5 times as expensive as those in 32 other nations. The president's commitment to addressing this crisis is commendable. His solution is the problem. Government intervention is what got us here. When the government can't balance its books, why would we expect it to be able to fix a much more complicated situation like healthcare and a lack of competition issue? In which scenario has the government EVER fixed pricing issues? Anyone...? In how many scenarios has government intervention created less competition and higher prices...? All of them.
As the answer to America's healthcare affordability woes, it's easy to blame "big, greedy drugmakers" that don't face generic competition. Still, the issue is much more complicated than that, and pushing through a big-government solution that pretends to be a solution will only worsen the situation.
Bringing generics to market is indeed helpful to a certain extent. The FDA's slow approval process (which can often take years) is one of the many reasons why over 500 brand-name medications don't have any competition. Regulators should address this issue, but the unfortunate truth is that generic drugmakers are also heavily involved in this problem in many ways.
Over 90 percent of the country's drugs are distributed by three drug wholesalers, each of which has paid multimillion-dollar payments to resolve allegations of bad business practices.
Many may already know that a few wholesalers have near-total control over the pharmacy service administrative organizations (PSAOs) that pharmacies use to get into pharmacy network contracts. This holds the potential to keep drug costs at an elevated level. What is more, healthcare and judicial experts suspect these drug distributors of entering into agreements with generic manufacturers with the intent of boosting prices.
As noted in the states' complaint, their 10-K filings to the Securities and Exchange Commission corroborate that generic drug wholesalers benefit from higher prices. Some companies have already paid the settlements to resolve accusations of generic drug manufacturers fixing prices. At best, it would be naive to assume that generics would not benefit from any deals they may make with these drug distributors.
Despite this, The government still acts as if the generic drug industry represents the panacea to America's drug affordability problem. It isn't. The only solution in these similar issues is not government intervention but the exact opposite; Tear down regulations that make it virtually impossible for startups and smaller companies to get new drugs to market. Reduce the time and cost it takes to get to market and create much more competition for the customer. Without competition, the current oligopoly system will continue until no competition is left and prices even go higher. The reason we've got to this point is that government intervention is screwing up the competitive landscape. In what scenario, when the government tries to fix costs, have prices ever gone done? If fact, prices always go even further higher. There's a reason we have by far the highest healthcare costs in the world; it's not the Drug companies, it's not the Hospitals, it's government intervention and the reduction of competition.
Instead of picking winners and losers in the healthcare industry, the White House should direct the attorney general and the courts to investigate the collision and marketplace concentration problems plaguing the healthcare industry.
Although this may fix part of the problem, the real issue in driving down pricing is more competition, not more regulation. More regulation has never lowered prices - ever!
What is the best type of regulation? Enable the consumer to pick what's best; every drug and every medical service should have a price listed. Every Doctor and Healthcare facility should be rated. Enable new drug companies to get products to market in a reasonable timeframe and cost structure. If these steps were implemented today, five years from now, the healthcare industry would be focused on Customer service and providing the best product for the best price....