Wednesday, August 16, 2006

Schwarzenegger Proposes Pharmaceutical Price Controls

Governor Arnold Schwarzenegger has proposed making deals with pharmaceutical companies to control the prices of certain pharmeceuticals.

According to an article by Sally C. Pipes published in the Wall Street Journal dated today (8-16-06)

Gov. Arnold Schwarzenegger is promoting his new discount drug plan as a "voluntary" agreement between pharmaceutical companies and the State of California. But it's more like a raw deal.

The California Prescription Drug Initiative calls upon drug manufacturers to offer five million low-income Californians huge discounts on prescription medications--up to 40% on brand-name drugs and a whopping 60% on generics.

Presumably, drug companies should offer these discounts out of the goodness in their hearts. But if they don't comply? Well, then they'll be coerced by the Terminator.

Companies failing to sell drugs at the government-imposed discount prices within five years can be kicked out of Medi-Cal, the multibillion-dollar health coverage system for low-income Californians.

Ms. Pipes is president and CEO of the Pacific Research Institute and author of "Miracle Cure: How to Solve America's Health-Care Crisis and Why Canada Isn't the Answer" with a foreword by Milton Friedman.

I ask the following questions on the subject:

  1. Is more government control the answer to high prices or do we just need better competition?
  2. What implications is this going to have on the pharmeceutical economy?
  3. Won't this force a decrease in quality of pharmeceuticals?

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