Drug Pricing

Folks are excited about the prospect of lower drug prices. Few empathize with the large pharmaceutical companies, and many are tired of the endless commercials on television. If that doesn't bother you, just wait until you visit the pharmacy!

One should wonder why the drug companies aren't protesting the loss of profits. One would expect those stock prices to fall, but they are not. You believe smart stockholders sell off their stock, driving prices down. The drug companies know their profits will not be affected.

Vice President Harris has made this one of the premier proposals she wants to implement as a campaign promise, just as President Biden did. The Biden administration recently announced reduced prices for the first ten drugs it negotiated with pharmaceutical companies under Medicare. This is one of the pieces that was part of the Inflation Reduction Act, which took effect in 2022, but these lower prices aren't scheduled to take effect until 2026. In fact, Vice President Harris bragged she was the tie-breaking vote for it to pass.

These ten drugs purchased through Medicare—a prescription drug coverage program for Americans 65 and older—were used by 9 million patients and accounted for $56.2 billion in total Medicare spending in 2023. Had the negotiated prices been in place that year, the government estimates Medicare would have saved about $6 billion, potentially saving the public $10-12 billion.

However, the drug companies know that much of the savings will be shifted from Medicare to the national debt, which will, in turn, be passed on to your children, grandchildren, and great-grandchildren.

Should Vice President Harris's promise of an even more expansive drug list occur, this would only exasperate the situation. This would mean shifting future costs. This happens in several ways. The drug companies will additionally impose fees. They will raise the cost to non-Medicare patients, some of the costs being passed directly to you, and force your private insurance premium to be higher. Likewise, if there is a shortage in supply, the private pay customers will receive the first distribution, and Medicare patients will be right in line after them.

Groceries

Sadly, the vice president's failure to understand the law of ‘Supply and Demand’ led her to make another ridiculous promise. She started talking about setting prices for groceries without talking to anyone who knows the grocery market. Those professionals quickly pointed out that most chains operate on a 3 percent net profit, while most family-owned and operated businesses are 1 percent or less.

This will lead to shortages if some can’t afford to buy in bulk and still make a profit. The longer-term effect will be less competition. Currently, the mega-stores may have as many as 40,000 grocery items. The projections predict that assortments will drastically drop below 10,000 items because of a lack of competition.

The government does some things well but not efficiently. The free-market system is far more efficient. The problem is when people put politics before common sense.

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