Bad Medicine

Offended at the prospect of drug companies trying to sneak in some last minute profit ahead of sweeping legislation designed to choke such impulses forever into submission, Congressional Democrats have taken up their pitchforks:
(emphasis mine)

WASHINGTON (Reuters) – Congressional Democrats are seeking government investigations into recent price increases of brand-name prescription drugs, as Congress finalizes an overhaul of the healthcare system.

Lawmakers are concerned the companies are trying to reap gains ahead of reforms aimed at lowering drug prices and forcing drugmakers to partly fund changes that aim to boost the number of Americans covered by health insurance.

[ . . . ]

Drugmakers “may be artificially raising prices for certain pharmaceutical products in expectation of new reforms,” wrote Charles Rangel and Henry Waxman, the respective chairmen of the House Ways and Means Committee and the House Energy and Commerce Committee.

“Any price gouging is unacceptable, but anticipatory price gouging is especially offensive,” their letter said.

Well imagine that. Drug companies trying to “reap gains” by “artificially raising prices”. What’s not clear is how Congressional Democrats expect drug companies to continue the R&D necessary to bring new life-saving drugs to market if they’re to do so without “reaping gains” on popular drugs already on the market. Do they expect that these drugs will fall from the sky? Profits are what businesses depend upon to fuel development of new products. Without profits, businesses fail, and failing drug companies should be low on anybody’s wish list—even economic know-nothings like “Congressional Democrats”.

And what’s this about “artificially raising prices”? There’s a market for drugs, isn’t there? And drug companies sell drugs, don’t they? There’s nothing “artificial” about their setting prices for their product based on the public’s demand for it. It’s actually quite organic. You want “artificial”? Let the government set prices based on things OTHER than the supply of that product and the public’s demand for it. See where that gets you.

As for price “gouging”, what better way to guarantee the efficient allocation of scarce resources than to permit their prices to rise to meet the demands of the market? During a gas shortage, more people will be permitted to purchase more gallons (and encouraged also to conserve) if the prices for those gallons go up with demand. If that gas instead is “artificially” required to remain cheap during a shortage, it will be wasted as the first few people would simply fill their tanks with more than they needed while leaving the rest high and dry. Let prices rise, and people will buy less at a time, leaving more for everyone to use more efficiently. Genius.

Drug companies need profits to make new drugs and to make current drugs better. The “reforms” that Congressional Democrats have in mind (price fixing, taxation, etc.) will reduce those profits, raise prices on patients and result in us all having diminished access to life saving drugs.

This is not reform. This is suicide.

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