Ron Paul Votes For Price Fixing Prescription Drugsby Kevin Boyd
Today, the U.S. House of Representatives voted today to allow the government to “negotiate” the price of prescription drugs bought for Medicare Part D. Ron Paul voted for it. There is a precedent for the government “negotiating” prescription drug prices, that is the VA drug plan. However, a piece in the Weekly Standard by Robert M. Goldberg describes the reality of VA “negotiating”.
Far from negotiating drug prices, the VA imposes them. Federal law requires companies to sell to the VA at 24 percent below wholesale price. If they won’t, they are banned from selling medicines to Medicaid, Medicare, and the public health service. The VA demands even deeper discounts by creating a national formulary–a restrictive list of approved drugs for its patients. Companies that don’t meet that additional discount don’t make the list. Patients must get drugs from VA pharmacies instead of retail outlets. Patients who endure side effects from a formulary medicine–or who fail to respond to one–must submit themselves to an arduous and time-consuming bureaucratic process to gain access to any pharmaceuticals not on the list.
In opposing the Medicare Part D reform in 2003, Democratic senator Patty Murray stated that she “was unhappy at the prospect that this plan could tell patients with MS, Parkinson’s disease, and ALS that they can’t get the drugs they need because their plan will not cover them.” Yet Azilect, the newest drug to treat the symptoms of Parkinson’s disease, approved in 2006, is not on the VA drug list, though every Medicare Part D plan has adopted it. In delaying access to new medicines, the VA is no different from the national health services of Canada and Great Britain. Tysabri, a new drug for multiple sclerosis, is available under every Medicare plan. It is not on the VA drug plan.
So in other words, price controls. These government imposed price controls have effects on both availability of drugs and the quality of the drugs. Since the drug companies will not give the drugs away to the VA, VA patients cannot buy the drugs. However, Medicare Part D is privately administered so newer and better and more drugs are available to patients under Part D. There are no price controls since private companies actually negotiate, not threaten, the drug companies to give them the best possible deal and the private companies pass them on accordingly.
In addition, as Goldberg points out, this could have a chilling effect on biotech research.
If making the lives of seniors shorter and sicker isn’t bad enough, the Democrats’ price control plan threatens to devastate pharmaceutical and biotechnology innovation just as the failed Clinton drug- pricing scheme of 1993 would have. Back then, a federal Breakthrough Drugs Committee was envisioned that would evaluate a drug’s cost effectiveness. In response, venture capital investment in biotech dropped drastically and the market valuation of the biotech industry plunged 40 percent.
Today, drug companies have over 1,000 partnerships with biotech firms. So among the first victims of the Democratic drug price-control scheme would be investors in the research Michael J. Fox also supports. That includes Merck, which just invested over $1 billion in a company run by Nobel Prize winners that developed a technique to suppress tumor growth common to stem cell therapy, and Eli Lilly, which is investing in a company called Suven that focuses on Alzheimer’s, schizophrenia, depression, vascular dementia, and Parkinson’s disease.
Speculative biotech research will be unsustainable under Democratic price pressure. Genzyme, whose drugs are always a target of Democratic anti-pharmaceutical show trials, just bought the rights to a Parkinson’s clinical trial program of Avigen. Celegene, which is likely to be bashed for the annual $61,000 price of Revlimid (a treatment for multiple myeloma and other cancers of the blood system), is investing heavily in a promising source of adult stem cells that have been used to replace dopamine neurons in people with Parkinson’s. It is hard to imagine how such research could be sustained in a system that would cut drug companies’ revenues and sales in half.
Of course to correct all these problems with HR 4, the Democrats will propose to make it better, with HillaryCare.
Now let me turn my attention to Ron Paul, aka Dr. No. He’s being billed as the “Taxpayer’s Best Friend”. Surely as a man who believes in the free market and in limited government, he knows better than to support price fixing. Unless of course a free market can be made for price fixing now. Things like this, his xenophobic streak, and his questionable stance on foreign policy will temper my enthusiasm for a Ron Paul candidacy.
Note: I’m not defending Medicare Part D, which should be repealed, or I’m not opposing Ron Paul’s bid for president, yet. I’m raising some questions.