Understand Aardvark this is not a new ploy. I can go back to mt youth as my dad was an independent pharmacist…as most drug stores were in the 50’s and 60’s. Nixon supported a “nationalization” of the drug industry and believe the most efficient way to run this program was through the Walgreen’s, the Osco’s and other “chains” primarily located in larger urban areas. In the early 1970’s Nixon announced a “price freeze” on retail pharmaceuticals…and this program ran for 6 months. At the end of this time many of the small independents were run out of business as their wholesale prices were many times, higher than that the local pharmacist was allowed to charge. For good measure, Nixon extended this “price freeze” another few months. The result was many small independents weee run out of business ness and the $$ of RX meds was turned over, de facto to “Big Pharma” and effectively eliminated the retailer from the pricing chain. Back in this days, pharmacy reps primarily call upon the individual pharmacy for inputs as to RX needs and costs. Today, I’m betting Pharm Reps never darken the door of a drug store in performance of their job duties. They call directly on the Dr. and let’s be honest, for the most part Socs don’t care what a RX costs…because everyone has insurance, ridge? I do know docs to get nice vacations and seminars (expenses paid) tossed in their direction …… I think the best offer dad ever got was tickets to the KC Royals after Ewing Kaufman bought the team…
I wish the corporate entities involved exercised a little more control in what they charge (and pass on) to the consumer as the product becomes made and finished for retail sale. The only suckers here apparently would be the producer of the raw product ( in Iowa the farmer or livestock producer who gavlittle wiggle room in “price” and the terail customer who pats for the finished product.
Given what has happen Mr. Aardvark/MAGA, what your solution? We can stand clear and let the thing destroy itself I guess. The re is a lot corporate greed out there. A box of Cheerio’s costing $4+ a box? Really? Those wheat farmers in Kansas must be making a killing, huh? I bet they are driving their Lexus’ to church on Sundays! Those cattle and pig farmers in Western and NW Iowa… I wonder what the he’ll they are doing with all their $$$… their backyards have to be full of vegetable cans filled will $100 bills! I mean, a T-bone is $20 at the meat counter…. There’s a lot of “profit” that needs to be fully explained… abs the American consumer simply doesn’t have the patience for such an explanation.
First of all, a fun story: one of my mentors brought the lawsuit (under the Medicaid statute) that undermined nixons wage and price controls.
Second, sell side price controls at retail do indeed have the effect of driving out small buyers that can’t secure discounts on the buy side ; but Robinson patman has actually dealt with the buy side problem for a long time.
Third, chains don’t leverage much on the cost side anyway either, except for generics, where they leverage a lot until they drive the competitors out of the market and you get Martin shkreli). Leverage now comes from coverage control, not distribution volume.
Fourth, as an aside, I’d note that patented (monopoly) medicines are not the same as commodity groceries.
As to the solution…well, there’s two pieces to it if I were king. First, one of the reasons drug (list) Prices are high is that revenue has to subsidize mandatory discounts, especially under govt programs. Setting aside Medicare and Medicaid discounts and rebates,16% of sales are at 340b discounts, at an average gross to net of 50%. (btw, retailers benefit from that indirectly). Those price controls may be fine as budget policy — because that’s what they really are — but they’re crap as health and economic policy. So step one, at the least, I’d streamline them and get rid of some of their worst features (like most favored nation pricing). The effects of mfn are well known and documented by economists.
Second, Trump was stupid about a lot of things, but one thing he was on the right track about was trying to force middlemen (pbms who determine coverage thru formulary competition) to pass the massive discounts from industry thru to consumers in a way that benefits them at the counter rather than their employer in the premium or the pbm exec in his vacation house. (Alex Azar actually had his official portrait signing this reg). Interestingly, the Ira’s “negotiated pricing” regime got at least this part right.
Finally, i am indeed conservative, but you would be wrong to tag me as maga.
