Dear Donald –
Prescription drugs are expensive, for a number of reasons. First off, it costs drug companies a lot of money to bring a drug to market. It may take them years to bring a single drug from research through to development and marketing. That being said, drug companies are rewarded by receiving patents for those drugs that allow them to exclusively produce those drugs for a number of years.
Drug companies typically exploit these patents by charging exorbitant prices to consumers. Unfortunately, no one actually buys enough prescription drugs individually to actually exert sufficient pressure on drug companies to keep the prices reasonable. No one, that is, except for the Federal government through Medicare. Only 3 weeks ago, you even recognized that fact, saying that you would use the bargaining power of Medicare to keep down prices. In fact, you made the patently ridiculous claim that leveraging that power would save the government $300 billion.
You see, demand for prescription drugs is what we call “inelastic,” meaning that it’s not particularly sensitive to price. Whether that heart medication costs $50, $100, or $500, if I need it to survive, my demand for the drug won’t go down. This gives sellers incredible pricing power, particularly when they have a monopoly on the drug. It’s why Martin Shkreli bought the rights to an HIV/AIDS drug and sent the price through the roof – he knew customers needed the product and couldn’t go elsewhere, regardless of the price. The way to reduce this market power is to either remove the monopoly, meaning to undercut patents, by, for example, cutting down on their length, or to increase the power of buyers to negotiate by having a single buyer or group of buyers with a large enough market share to meaningfully do so (e.g., Medicare).
Today, after meeting with pharmaceutical representatives, you walked back your intention to bargain with companies, saying that you didn’t want to do anything to make it harder for companies to bring drugs to market, including reduce the prices they can command. Truly a cowardly backtrack.
People across this country struggle every day to cover the cost of their medications. Why wouldn’t you seek to reduce their burden, unless the focus was on corporate profits and not working folks? (And don’t worry, I’m looking at Cory and his vote on Canadian drug imports,too)
Medicine should be accessible to those who need it, and corporate profit margins are not a good enough reason to fleece the American people.