According to the Boston Globe, drug companies are scared that a new California will actually work the way it’s supposed to–by lowering the cost of prescription drugs for uninsured people.
The California law, like an earlier one enacted in Maine, allows the state to negotiate with drug companies to get lower prices for low-income people without drug coverage. Drug company officials trot out tired soundbites to oppose such programs, calling such negotiations “price controls.” But of course, when they get to charge any price they want, that’s not “price controls.” The California law simply does what Medicare should do: allow a big purchaser of drugs to use its bargaining leverage to get discounts from drug companies. That’s not “price controls.” That’s “Negotiating 101” or “Free Market 101.” Big purchasers should get big discounts, it’s as simple as that.
Drug industry representatives continually say they need to charge sky-high prices to pay for all the research & dvelopment they do. But remember: drug companies spend much more on marketing and administration than they do on R & D. That’s why you see nonstop TV ads promoting the latest, most expensive drugs and so many sales reps crowding your doctor’s offices.
The drug company spokespeople can’t seem to get their stories straight. The article quotes some complaining about the California law forcing them to reduce their prices. But Jan Faiks, from the drug industry group PhRMA, says in the article “We support discounted drugs for Californians,” but is worried the California law won’t work to get savings.
Stay tuned for more developments.