Josh Rosenau of Thoughts in Kansas has this to say about Medicare bargaining for lower drug prices:
A big part of the 6 for ’06 agenda that Nancy Pelosi proposed as the agenda for the incoming Congress was allowing Medicare to negotiate drug prices. Forbidding that simple expedient was by far the most foolish thing (among many foolish things) in the Bush prescription drug plan. The VA negotiates drug prices as does every other prescription drug plan. But Bush had too many friends in Big Pharma, so they get to charge the taxpayer whatever they want. Huzzah!
The argument advanced against negotiating those prices is something like this (from Kevin Drum): “If the feds negotiate prices, then prices will go down. And if prices go down, pharmaceutical companies might make less money. And if pharmaceutical companies make less money, they’ll do less basic research and churn out fewer lifesaving drugs.”…
[But drug companies] must invest in R&D because only by inventing and patenting new drugs can they continue to have anything of any value. Pharmaceutical companies don’t get ginormous market capitalization because of the cost of the factories, they get those market caps from the value of their R&D. If you doubt that, look at what happens to a stock price when a drug fails to get FDA approval, or when a company loses a patent fight. Before the big drugmakers would cut R&D, they’d sell off factories and boil their marketing teams into soap. Without the revenue from their patented drugs, they would be nothing.
Wonder how much a bar of “Pfizer Marketing Team Soap” would cost?