Let the free market work its magic and get us coronavirus vaccines

 Sally Pipes of the Pacific Research Institute has an excellent op-ed at the Fox News website right now. It's about how wrongheaded the Very Stable Genius's approach to drug pricing is, and the implications for keeping America the most innovative nation in the world with regard to new life-saving pharmaceutical products. 

President Trump announced Friday that he will proceed with his plans to peg the prices of certain drugs prescribed largely at doctors’ offices under Medicare Part B to the lower prices that other developed nations pay for those drugs. That may sound good at first glance, but in reality, the move will slow the development of new drugs, consigning countless patients to needless suffering and premature death.

The president said he's trying to secure the best deal for American patients. But his move will deprive drug companies of billions of dollars in revenue, making it impossible for them to spend the money they no longer earn to develop new drugs

As Stephen J. Ubl, president of the Pharmaceutical Research and Manufacturers of America, correctly pointed out in a statement after President Trump’s announcement: “It defies logic that the administration is blindly proceeding with a ‘most favored nation’ policy that gives foreign governments the upper hand in deciding the value of medicines in the United States. History proves that when governments take unilateral action to set prices, it disrupts patient access to treatments, discourages investment in new medicines and threatens jobs and economic growth.” 

And while the VSG is ostensibly doing this to burnish his populist bona fides, his touchy ego is definitely a factor. He thinks Big Pharma deliberately dissed him:

President Trump appears to have an ulterior motive regarding his move against drug companies. He claims — without providing any evidence— that the drug manufacturers working on coronavirus vaccines deliberately withheld the good news of vaccine progress to harm his chances of reelection.

“Pfizer and others even decided to not assess the results of their vaccine, in other words not come out with a vaccine, until just after the election,” the president told reporters Friday at the White House. “That’s because of what I did with ‘favored nations’ and these other elements — instead of their original plan to assess the data in October. So they waited and waited and waited, and they thought they’d come out with it a few days after the election.”

Pfizer Chairman and CEO Albert Bourla has denied that the election had any impact on his company’s announcement of a promising coronavirus vaccine. In an Oct. 16 open letter he wrote that his company was “operating at the speed of science.”

Accusing drug companies of delaying a vaccine to protect us from a disease that has killed more than 254,000 Americans and infected more than 11.9 million is an extraordinarily serious charge, and denigrates the work of everyone involved in development of experimental coronavirus vaccines that we all hope will become available in December.

Pipes then gives a ringing defense of the free market that ought to be shouted from the rooftops:

This ecosystem is the reason the United States creates more drugs than the rest of the world. It's defined by two key features.

The first is strong protections for intellectual property. Without patents and other intellectual safeguards, it would be beyond irrational to invest the nearly $3 billion required, on average, to develop just one successful drug.

It’s important to understand that for every drug that successfully comes to market, many more prove to be unsafe or ineffective — meaning the drug companies can never sell these drugs and never recover their substantial research and development costs. But without conducting expensive research, it’s impossible to know which drugs will be safe and effective. 

Robust intellectual property protections ensure that when a drug does make it to market competing firms can't steal a company's research and manufacture knock-off products with impunity.

The second feature is that the pharmaceutical sector is governed by market principles, for the most part. Unlike in many other developed countries, the U.S. government generally doesn't impose price controls on medicines. Drug firms have relative freedom to charge a price that the market will bear. So they have a better chance of recouping their substantial upfront research and development costs.

The relatively free market in the U.S. gives investors the confidence they need to take big risks funding a promising new cancer therapy, a potential Alzheimer's breakthrough, or, in the current case, a vaccine for COVID-19.

These basic components — property rights and free markets — are the two pillars of our capitalist system that has proven repeatedly to provide greater benefit to ordinary citizens than socialism or communism in countries around the world.

Preach it!

. . . a profit motive isn't incidental to America's superiority in drug innovation. It's an essential component — one that can't be abandoned without undermining progress towards much-needed treatments and cures.

Without the capitalist system that underpins America's drug industry, the world would have to wait much longer for the medical breakthroughs that will ultimately win the war against COVID-19 and help the millions of us stricken with other diseases every year.

This is what we need more of, not some attempt to keep Trumpism alive after its namesake standard-bearer's inevitable demise by saying that conservatism ought to abandon "free-market fundamentalism" and tailor itself to appeal to some notion of a "working class" that doesn't really clamor for protection.  

The world is going to keep changing, as will the definition of "working class." What conservatism brings to the table is a set of eternal verities - like free-market principles - that serve societies well at any time.

 

 

 

 

 

The Very Stable Genius attempts to bribe older voters

 There's been some drift on the Right, among both Trumpists and actual conservatives. away from the free-market orthodoxy that has always been one of the three pillars of the conservative worldview. Trumpists have been fine with tariffs, for instance (even though they have failed to produce the trade results that the VSG has promised.) Among actual conservatives, a strain of economic thought has arisen that posits that a sort of sociological view is needed, one that takes into account dislocation and the changing nature of labor.

My view is that conservatism by definition is about immutable principles - things that don't change. I stand by my LITD First Law of Economics: A good or service is worth what buyer and seller agree that it is worth, period. No other party has any business being part of coming to that agreement, most certainly not government. 

Any other scheme smacks of central planning, no matter how fancily it's dolled up. It always comes down to a proclamation that "we have to do something for such-and-such sector of the population." The question that looms, then is always, "Who is 'we'?" I'd like to suggest that sovereign individuals are best suited to determine their own destinies. This remains true even as advances in technology, the proliferation of global supply chains and more diverse populations come about.

One person on the Right - I'm using that term very, very loosely; he was a Democrat as recently as 2009 - who is definitely not a free-market advocate is Donald Trump. 

The guy has a lot on his plate these days: the Supreme Court vacancy, continued urban unrest, the ongoing pandemic, and, of course, the upcoming election. But in the middle of all that, he's found time to hatch a scheme the purpose of which is clearly to curry favor with the senior demographic:

 President Donald Trump said that Americans in the Medicare program for the elderly and disabled will be sent $200 discount cards for prescription drugs within weeks, potentially putting cash in their pockets ahead of his November re-election.

“Nobody’s seen this before. These cards are incredible,” Trump said Thursday in a speech outlining what he called an “America First Health Plan” in Charlotte, North Carolina. “The cards will be mailed out in coming weeks. I will always take care of our wonderful senior citizens.”

Trump didn’t explain in his speech what program or authority would allow the government to provide the cards. Assuming they are sent to 33 million Medicare beneficiaries, the figure Trump used, the cards would cost about $6.6 billion.

Money for the cards will be drawn from a demonstration program Medicare uses to test new payment systems and other projects, and the cost will be offset by future savings generated from new price cuts Trump has ordered for drugs bought by Medicare, according to a White House official. The cards can be used for prescription drugs co-pays, the official said, but didn’t elaborate.

The Centers for Medicare & Medicaid Services referred questions about the cards to the White House.

Trump is struggling to secure the votes of older Americans with less than six weeks before the election. Several recent polls indicate his re-election opponent, former Vice President Joe Biden, is tied or leading Trump among people 65 and older, a turnabout from 2016 when the president won the senior vote by a comfortable margin. 

Per the line above that I have emphasized with boldface, isn't this the sort of thing that needs to come out of Congress in the form of a passed bill?

James C. Capretta, writing at The Bulwark, says that this is just the latest attempt by the VSG to look like a hero to the senior set by lowering their drug prices, and that every stab he's made at it is extraconstitutional and incoherent:

According to the New York Times, in July and August, President Trump pursued one last (and probably illegal) gambit with the pharmaceutical industry to deliver lower prices to consumers.

He and his aides used the threat of pricing tied to an international benchmark to coerce the industry to agree to provide direct assistance to Medicare beneficiaries. The Times reports that major  pharmaceutical companies were prepared to pay for $150 billion worth of cost-sharing relief for senior citizens if the administration halted its price-benchmarking plan. It is not clear from the story how the drug companies could provide such assistance under current law.

That wasn’t enough for Trump. He and his aides wanted drug discount cards—worth $100 apiece—delivered in October to every Medicare beneficiary. Medicare has 62.6 million enrollees in 2020, so this scheme would have required a one-time, $6.3 billion payment from the companies.

The industry’s negotiators balked at this request, and the deal fell through.

Two points are worth emphasizing about this remarkable episode.

First, this extraconstitutional behavior would have shocked the political world had it been attempted in a previous era. The executive branch was trying to force a private industry to pay for direct assistance to public program enrollees, one month before a national election. It seems not to have occurred to anyone at the White House that perhaps this was a matter that required legislation and a legitimate federal appropriation. If Congress wanted to create such a program, and make the industry pay for it, it could do so by imposing a tax and using the proceeds for this purpose.

Second, Trump and his aides seem incapable of deciding what it is that they want on drug costs. If the reporting is accurate, the industry was prepared to pay for substantial pricing relief for seniors, and thus deliver a victory for the president at a crucial moment in his term. And yet the administration couldn’t take yes for an answer. Top White House officials insisted on a request that was so outlandish that the industry had little choice but to reject it. The collapse has left the president with nothing to tout on drug pricing.

This latest failed negotiation with pharmaceutical companies fits a pattern. The president came into office saying he would deliver where his predecessors fell short, by lowering prices paid directly by consumers. But he has yet to put in place any meaningful reforms, in large part because he and his aides have never settled on a coherent plan and pursued it consistently. This is a recurring theme of his presidency, and reveals the limits of governance by instinct, erratic improvisation, and the roar of the crowd.

His fevered focus on winning the election is making for ever-crazier moves. I sure hope some folks in the House and the Senate muster the spine to speak out about this.