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DTC in Perspective: Clinton Wants To End DTC!

September 25, 2015 by Bob Ehrlich0
Bob Ehrlich
“Hillary has a tax proposal that will kill DTC.”
-Bob Ehrlich

Outdoing Bernie is hard to do but Hillary seems to be more anti-drug company than the avowed socialist candidate. Hillary is tired of high drug prices. Here is someone that charges a public university $225,000 for a canned speech and is outraged at high prices from drug companies. Never let hypocrisy affect a good political talking point.

Hillary has a tax proposal that will kill DTC. She wants to make drug marketing a non-tax deductible business expense. That has been proposed before and successfully defeated. The advertising lobby knows that deciding to make drug advertising non-deductible is a slippery slope. Does the government then make advertising fast foods non-deductible because it harms public health? What about violent video game advertising? Beer? Having the government decide what can be advertised is dangerous. Proposing tax policy to discourage advertising certainly gets all the media company lobbyists nervous.

Hillary also wants to allow Medicare to negotiate drug prices, an oft-mentioned proposal by many on the left. She also wants to limit to $250 a month what consumers pay for drugs for chronic conditions. By doing this she thinks drug companies will be forced to lower prices.

Hillary knows when to time her outrage. The drug industry has increased prices more than inflation recently. Much of this is because they invented and marketed some high price cures for Hep C. There has also been a lot of negative publicity recently about a drug that went from $13.50 a pill to $750 a pill for reasons not well explained by the small drug company who recently bought the drug. Sometimes the critics have a fair point and the drug industry must be reasonable on pricing. This company responded to the harsh criticism and announced it would go back to the $13.50 soon.

Democrats like to use government power to limit prices. They usually have no business sense in proposing these price actions. They think if they mandate lower prices, that there will be no negative impact on innovation or supply. These proposals are quite naïve about how business works. That is likely because many key Democrats have no business background. Hillary thinks drug companies have these bags of ill gotten cash sitting in vaults. If she mandates they charge less, then these drug barons will just act as if nothing has changed. The drug companies, in her view, will still make enough to behave the same in terms of drug development. After all how many bags of cash do they need?

Drug companies are the greedy enemies of society, according to Hillary and Bernie because they charge more than decent people should pay. The left would like to decide what profits are acceptable for many industries they find are greedy. Oil companies and banks are also frequent targets. Free markets do a good job of deciding a fair price. Government is just not very good as a market referee.

Price controls just do not work. You reduce price and you get less re-invested on new products. In Bernieland the noble government scientist invents cures and gives them away for cost. In Hillaryland, the paternal government tells industry what a fair profit should be. I agree drugs should be affordable, but cost of research does matter. Drug companies are entitled to make good money. Hillary and Bill and are free to charge a market rate for a canned speech. If Hillary could only get $5000 a speech would she do as many?

Free markets can be messy but they ensure that those with needed products have incentives to keep making them. It is silly to think the laws of economics will be changed by government mandates. Cap drug prices and see how many breakthrough new products are developed. That expensive cure for Hep C would never have been invented. It will be politically popular to stick it to drug companies but incredibly stupid. That next pandemic that will inevitably occur will not be cured by Bernie or Hillary. It will be those “evil” drug barons who do it, but only if they have those bags of cash available to invest.

Bob Ehrlich


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