The Conservative Case for Drug Price Controls?
Reading a book called Rise of the Robots about the increasing role of automation in our lives. The author takes a bit of a detour in the chapter on health care to discuss how the markets are broken. I’m not sure how related to automation this is, but he makes this interesting point:
…every other national government negotiates prices with the drug companies. The result is that Americans, in effect, subsidize the lower drop prices in the rest of the world.
[…] It’s something of a mystery to me why this is not more disturbing to Americans, and to grassroots conservatives in particular. The Tea Party, after all, got started after a famous rant by CNBC personality Rock Santelli, who decried the fact that people with mortgages they couldn’t afford might be subsidized by taxpayers. Why aren’t average Americans more upset that they are paying pharmaceutical freight for the right of the world – including a number of countries that have significantly higher per capita incomes than the United States?
Drug companies are price-limited in other parts of the world, so they charge higher prices in the United States to make up for it. The rest of the world gets a free(er) ride off the backs of U.S. patients.
The U.S. effectively ships billions of dollars overseas by paying the drug companies to provide drugs at lower costs to other countries. We pay more, so they pay less.
Now, I’m not blanket condemning this. The are some countries so poor that this might be a unintended humanitarian effort than needs to happen. But it’s quite interesting to look at from a politically conservative standpoint. Could this be a rare situation where a political conservative should support price controls in the U.S. so drug companies would have no choice but charge other countries more to level prices?