1. He and his team don't think about anything carefully.
2. Are we now at the point where NOTHING needs to be done by legislation? The president can just unilaterally do whatever he wants? I see no reason to believe Congress will pass anything. Even if Trump held a supermajority of both houses I'm not sure he would present a bill to Congress. Those of us who believe in Constitutional government are really up againast it.
America is at the point where they can’t do it all. With the national debt exceeding 36 trillion, something has to give. If America were to allocate a trillion dollars over a period of time and for example given the choice of funding drug research or combatting climate change, which should it be? America chooses politically. That’s the way it works. As Thomas Sowell said, “there are no solutions. There are only trade-offs.” It would be ideal if we decided these trade-offs against absolute truths. We’d spend more wisely. That’s probably the key - not much wisdom.
This is one of the infrequent occasions when I disagree with Mr. Mirengoff, at least in significant part. I don't disagree that is wrong with Americans having to pay higher prices for drugs than people in other industrialized countries. (I think there is close to a consensus that it is okay for poorer countries to receive big discounts. When I refer here to other countries, I'll be referring to the industrialized ones.)
Mr. Mirengoff, like almost everyone else who writes about this problem, neglects the obvious solution: industrialized countries should pay the full price, just as Americans do. To the extent their failure to do so involves a shift of the costs of research and development to Americans through inflated prices, the prices for Americans would go down. American drug companies should simply refuse to provide the drugs to countries that fail to pay the full price. The American government should encourage them to do so, and to the extent necessary support them in doing so. If a particular American customer said to a drug company, "I won't pay the full price, so give me a discount," the drug company would laugh at the customer. Why should it treat a foreign government any differently?
I don't see why more than our government rallying our drug companies to stand strong would be necessary, but if it is thought more government intervention into the market is necessary, it should take the form of prohibiting price discrimination favoring foreign customers over American customers. That is not ideal, because pricing is complicated, and it is better for markets to work out the details. But it would be far preferable to the kinds of intervention Trump may be calling for as well as preferable for Democratic calls for direct price controls. I also believe the government should stop demanding discounts for Medicare. Why should people not benefiting from Medicare pay the drug costs of those who do benefit?
The premise that drug costs are too high is correct with specific reference to the discrimination between American and foreign countries. But it is not correct in any more general sense. Pharmaceuticals make up a small percentage of total American healthcare costs. Typically, drugs prevent or mitigate far larger expenses resulting from the conditions that develop without the drugs. When the drugs are preventive (e.g., statins, which are very widely taken and prevent a large number of heart attacks), the savings are enormous. When they are a part of a treatment of a disease, they typically pay for themselves many times over because they are an alternative to more costly treatment. Even when the drug simply extends lives or cures a disease that could not otherwise be cured, it seems obvious that the situation is one in which the high cost is worth paying. When people look at the prices to an individual for some particular drug in isolation, they can indeed seem astronomical. But they are not looking at the savings brought by the drug, or the value of the drug compared to the much more labor-dependent alternative medical services, such as a simple hospital stay.
If the U.S. were the only country in the world, in a free-market system we would be paying about what we are paying now for drugs, and they would be a bargain. As it is, people in other countries are freeloading off of drugs we produce, and they ought to be required to pay their fair share, so that the bargain they get would be no more than the one we get. So we should make sure that they do pay their fair share. Interventions beyond that or other than that will have the disastrous effect of preventing or greatly delaying the discovery of great potential benefit. I am 82 years old and unlikely to be affected by decisions by drug companies to cut back on r and d, or by market decisions to invest less on start-ups, some of which would produce great benefits. But my children and my grandchildren, as well as all other Americans less advanced in age than I am will be deprived of treatments that could extend and improve their lives. The stakes are very great.
If it is true that the NIH grants to universities were using a 60 plus per cent overhead fee, then certainly adjustments can be made to continue the research with a more appropriate overhead.
Great post. Jim Dueholm
1. He and his team don't think about anything carefully.
2. Are we now at the point where NOTHING needs to be done by legislation? The president can just unilaterally do whatever he wants? I see no reason to believe Congress will pass anything. Even if Trump held a supermajority of both houses I'm not sure he would present a bill to Congress. Those of us who believe in Constitutional government are really up againast it.
America is at the point where they can’t do it all. With the national debt exceeding 36 trillion, something has to give. If America were to allocate a trillion dollars over a period of time and for example given the choice of funding drug research or combatting climate change, which should it be? America chooses politically. That’s the way it works. As Thomas Sowell said, “there are no solutions. There are only trade-offs.” It would be ideal if we decided these trade-offs against absolute truths. We’d spend more wisely. That’s probably the key - not much wisdom.
This is one of the infrequent occasions when I disagree with Mr. Mirengoff, at least in significant part. I don't disagree that is wrong with Americans having to pay higher prices for drugs than people in other industrialized countries. (I think there is close to a consensus that it is okay for poorer countries to receive big discounts. When I refer here to other countries, I'll be referring to the industrialized ones.)
Mr. Mirengoff, like almost everyone else who writes about this problem, neglects the obvious solution: industrialized countries should pay the full price, just as Americans do. To the extent their failure to do so involves a shift of the costs of research and development to Americans through inflated prices, the prices for Americans would go down. American drug companies should simply refuse to provide the drugs to countries that fail to pay the full price. The American government should encourage them to do so, and to the extent necessary support them in doing so. If a particular American customer said to a drug company, "I won't pay the full price, so give me a discount," the drug company would laugh at the customer. Why should it treat a foreign government any differently?
I don't see why more than our government rallying our drug companies to stand strong would be necessary, but if it is thought more government intervention into the market is necessary, it should take the form of prohibiting price discrimination favoring foreign customers over American customers. That is not ideal, because pricing is complicated, and it is better for markets to work out the details. But it would be far preferable to the kinds of intervention Trump may be calling for as well as preferable for Democratic calls for direct price controls. I also believe the government should stop demanding discounts for Medicare. Why should people not benefiting from Medicare pay the drug costs of those who do benefit?
The premise that drug costs are too high is correct with specific reference to the discrimination between American and foreign countries. But it is not correct in any more general sense. Pharmaceuticals make up a small percentage of total American healthcare costs. Typically, drugs prevent or mitigate far larger expenses resulting from the conditions that develop without the drugs. When the drugs are preventive (e.g., statins, which are very widely taken and prevent a large number of heart attacks), the savings are enormous. When they are a part of a treatment of a disease, they typically pay for themselves many times over because they are an alternative to more costly treatment. Even when the drug simply extends lives or cures a disease that could not otherwise be cured, it seems obvious that the situation is one in which the high cost is worth paying. When people look at the prices to an individual for some particular drug in isolation, they can indeed seem astronomical. But they are not looking at the savings brought by the drug, or the value of the drug compared to the much more labor-dependent alternative medical services, such as a simple hospital stay.
If the U.S. were the only country in the world, in a free-market system we would be paying about what we are paying now for drugs, and they would be a bargain. As it is, people in other countries are freeloading off of drugs we produce, and they ought to be required to pay their fair share, so that the bargain they get would be no more than the one we get. So we should make sure that they do pay their fair share. Interventions beyond that or other than that will have the disastrous effect of preventing or greatly delaying the discovery of great potential benefit. I am 82 years old and unlikely to be affected by decisions by drug companies to cut back on r and d, or by market decisions to invest less on start-ups, some of which would produce great benefits. But my children and my grandchildren, as well as all other Americans less advanced in age than I am will be deprived of treatments that could extend and improve their lives. The stakes are very great.
If it is true that the NIH grants to universities were using a 60 plus per cent overhead fee, then certainly adjustments can be made to continue the research with a more appropriate overhead.