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The high cost of prescription drugs, however, does not just derive from the expertise to develop them. Drug companies receive patent protection for drugs that allows them to charge monopoly rents. This is a distortion in the market, one that the government has determined to be socially favorable. The cost, however, has reached the point where drug costs are also socially unfavorable, particularly if they lead to an erosion of America's credit standing.
Curtailing drug costs may not be politically straightforward, but the economics of it are. The monopoly rents can be capped. Governments in many countries cap drug costs and perhaps the public option is tended to give the U.S. The same power. There may be some quid pro quo for the drug companies -- extending the life of patents, more support for orphan drugs or a streamlined FDA approval process that lowers the costs of development -- but capping drug costs goes a long way to capping the cost of health care. There are other ways as well. A cap with no compromise could be initiated. Drug companies will be faced with either accepting lower monopoly rents or finding ways to reduce their costs. Many industries have gone offshore and if that is the fate of the pharmaceutical business then so be it. Pharma isn't going anywhere of course, but by reducing the impact of the market distortion on prices, drug cost increases can be stabilized. Will this stifle innovation? That is debatable, since drug companies can easily adapt to lower profits -- they make those same capped rents in Europe and Canada and still find ways to make money. But even...
(2009). Reform or else. New York Times. Retrieved December 4, 2009 from http://www.nytimes.com/2009/12/04/opinion/04krugman.html?_r=1&ref=opinion
Rampell, C. (2009). Economists' letter to Obama on health care reform. New York Times. Retrieved December 4, 2009 from http://economix.blogs.nytimes.com/2009/11/17/economists-letter-to-obama-on-health-care-reform/
Romer, C. (2009). Health care reform is an economic necessity. Yahoo. Retrieved December 4, 2009 from http://news.yahoo.com/s/ynews/20090602/ts_ynews/ynews_ts346
Leonhardt, D. (2009). Health care reform and the unpopular t-word. New York Times. Retrieved December 4, 2009 from http://www.nytimes.com/2009/07/29/business/economy/29leonhardt.html
Sullivan, A. (2009). Health care costs handcuff entrepreneurs. Reuters. Retrieved December 4, 2009 from http://www.reuters.com/article/idUSTRE54P2RJ20090526
CIA World Factbook: United States. (2009). Retrieved December 4, 2009 from https://www.cia.gov/library/publications/the-world-factbook/geos/us.html
Mandel, M. (2008). Where are health care costs rising the fastest? Business Week. Retrieved December 4, 2009 from http://www.businessweek.com/the_thread/economicsunbound/archives/2009/09/where_are_healt.html
De la Torre, R. (2009). Dear Obama: A letter about health care reform. Business Week. Retrieved December 4, 2009 from http://www.businessweek.com/managing/content/jan2009/ca20090123_798447.htm
Works Cited:
Krugman, P. (2009). Reform or else. New York Times. Retrieved December 4, 2009 from http://www.nytimes.com/2009/12/04/opinion/04krugman.html?_r=1&ref=opinion
Rampell, C. (2009). Economists' letter to Obama on health care reform. New York Times. Retrieved December 4, 2009 from http://economix.blogs.nytimes.com/2009/11/17/economists-letter-to-obama-on-health-care-reform/
Romer, C. (2009). Health care reform is an economic necessity. Yahoo. Retrieved December 4, 2009 from http://news.yahoo.com/s/ynews/20090602/ts_ynews/ynews_ts346
Leonhardt, D. (2009). Health care reform and the unpopular t-word. New York Times. Retrieved December 4, 2009 from http://www.nytimes.com/2009/07/29/business/economy/29leonhardt.html
Sullivan, A. (2009). Health care costs handcuff entrepreneurs. Reuters. Retrieved December 4, 2009 from http://www.reuters.com/article/idUSTRE54P2RJ20090526
CIA World Factbook: United States. (2009). Retrieved December 4, 2009 from https://www.cia.gov/library/publications/the-world-factbook/geos/us.html
Mandel, M. (2008). Where are health care costs rising the fastest? Business Week. Retrieved December 4, 2009 from http://www.businessweek.com/the_thread/economicsunbound/archives/2009/09/where_are_healt.html
De la Torre, R. (2009). Dear Obama: A letter about health care reform. Business Week. Retrieved December 4, 2009 from http://www.businessweek.com/managing/content/jan2009/ca20090123_798447.htm
Fiscal policy is defined as a government spending policy that influences macroeconomic conditions (Investopedia, 2009). The business side of the Stimulus Act is essentially a tax policy in disguise, because the net effect of the stimulus is a reduction in taxes paid. However, the tax rate is not specifically addressed. On the individual side, the stimulus is strictly microeconomic in nature and is not policy related. It is essentially a
The theory was that by giving consumers tax rebates, aggregate demand could be increased. This in turn would, along with the corporate tax cuts, give firms more confidence to increase their own spending. When the bill was being drafted, the economy was not yet in a state of total devastation, but there were signs of a pending recession. By drafting a bill that would increase aggregate demand, it was
The intention of the Act was to stimulate consumer spending. It focused on lower and middle income Americans, who might be more apt to spend rather than invest or save their tax refund. In other words, a wealthier individual might not hesitate to make a large purchase at any time, regardless of tax policy. But a lower or middle class individual who had been putting off necessary repairs, payments, or
They may feel and actually be 'out of the loop' of office politics because they lack a physical presence in front of their colleagues and superiors. As Woody Allen once observed, sometimes the most important thing in life is just showing up. Additionally, not all telecommuting workers are conscientious about doing their work. Without the supervision of a living, breathing manager they may use the extra freedom to slack in
Economics: The State of the U.S. Economy Cousin Edgar, a global investor, is seeking to capitalize on the thriving gasoline industry and the rising world demand for oil by purchasing several gas stations in the U.S. market. Inspiring his interest is the high price of gasoline, which he reckons will rise even higher in the near future, thanks to the urbanization and industrialization currently being witnessed in the developing economies of
Stimulus Bill Political Communication Political Communication during the Stimulus Bill Debate In times of economic uncertainty and national emergency, the government has the capacity to make decisions that it believes will aid the country in its time of need. Such a time of need occurred in 2009 when the country continued to face an existence of dire economic circumstances involving national cash-flow and jobs. In order to set economic recovery into motion,