Would readers feel comfortable buying prescription drugs from an organization that can’t keep human poop off the sidewalk? California residents may soon be presented with that very dilemma if Gov. Gavin Newsom is successful in his latest adventure for California taxpayers.
The Wall Street Journal reports, “California would become the first state to contract with generic-drug manufacturers to make prescription medicines to sell to residents, under a plan proposed by Gov. Gavin Newsom that aims to control rising health costs.”
This is the latest example of government stepping in to ‘solve’ a problem initially caused by government. Generic drug prices are high due to government interference in the marketplace and burdensome regulatory red tape.
Ideally, consumers should have a wide variety of generics to choose from, produced by a number of manufacturers. The competition between manufacturers would work to reduce prices.
This is not the case today. A generic is a formerly brand-name drug with an expired patent. After the patent expires, any company can manufacture the drug. Unfortunately, regulations for even generics are so burdensome and expensive that frequently only a single company produces the drug.
That means there is zero competition and the sky is the limit for pricing the drug.
Gavin plans to fight this with a new taxpayer-funded bureaucracy. Gavin’s “new Office of Health Care Affordability in the spring, he said, which would set cost targets for various health-care industry sectors and propose ‘financial consequences’ if those targets aren’t met.”
To give you an idea of how this will work in the future, let’s see how the state regulatory empire has kept electricity rates (when the power is actually on) ‘affordable’ for Californians. According to the website ElectricChoice.com, California has the second lowest per capita energy consumption in the nation. Which is really an advantage because Californians pay 15.23 cents per kWh for their electricity, while in Texas — which is welcoming former Californians every day — residents there pay just over half the cost for electricity in California. A mere 8.99 cents per kWh.
Texas also doesn’t manufacture drugs.
Newsom may think drug manufacturers are a captive market and he can force them to accept any price for their product, which simply isn’t true. A manufacturer has many options including rationing the number of pills sold in California to minimize losses or simply stopping the sale of its product within the state.
Pharmaceuticals consultant Pratap Khedker told the Journal, “To save money, California will have to select drugs whose prices have risen substantially that are prescribed often. Too few drugs with low utilization ‘doesn’t actually translate into hundreds of millions of dollars to save, so you have to come up with the right trade-off,’ he said.”
We are not optimistic about the results of this program for the individual drug buyer, but based on past experience, we are certain of one thing. The bureaucracy Gavin will create to pursue his political goal will cost taxpayers many, many millions.
Michael Reagan, the eldest son of President Reagan, is a Newsmax TV analyst. A syndicated columnist and author, he chairs The Reagan Legacy Foundation. Michael is an in-demand speaker with Premiere speaker’s bureau. Read more reports from Michael Reagan — Go Here Now.
Michael R. Shannon is a commentator, researcher for the League of American Voters, and an award-winning political and advertising consultant with nationwide and international experience. He is author of "Conservative Christian’s Guidebook for Living in Secular Times (Now with added humor!)." Read more of Michael Shannon's reports — Go Here Now.
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