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Selected news articles which highlight important policy issues.

News: Weekly Archives

News for the week of 06-01-2004

Comparing Costs: Push for online drug prices
Newsday, 6-1-04

U.S. Senator Chuck Schumer has called for New York to list online prescription drug prices using state Medicaid data as a baseline. He also plans to introduce a bill that would allow all states to offer similar online databases that would allow consumers to comparison shop for their prescription drugs, a plan modeled on a successful Maryland website launched last month. Price competition - one of the cornerstones of the new federal Medicare prescription drug benefit - has been widely derided in the press as too confusing for seniors, but Senator Schumer apparently shares the belief that consumers can use pricing information to shop for bargains and drive prices down even further. Using the states as central repositories for pricing date is an interesting policy idea, but using Medicaid prices as the baseline implies that setting price controls on prescription drugs is the ultimate goal of critics of the Medicare drug benefit program. No one argues that consumers should, for instance, all pay the same price as the government pays for food purchases, federal uniforms, or cars - but the fact that the government is the largest single purchaser in the health care market place (up to 50% of all healthcare spending when employer tax subsidies are added into the mix) naturally begs the question as to why the government shouldn't set prices for all healthcare across the board. The reality is that the "baseline" price the government pays as the monopsony buyer inevitably depresses incentives to improve price and quality, as national health systems across the developed world show. Increasing competition through market driven public policies not only means making more information available to consumers, but letting them accept or reject prices on an individual, not collective, basis.

[permanent link]

Medical Aid on Way for Poorer Nations: Biotech Sector to Help Small Firms Speed Delivery of New Drugs, Advancements
Washington Post, 6-6-04

When it comes to providing medicines for diseases that ravage developing nations, large pharmaceutical companies will often offer deep discounts or even donate the products in question so that developing nations have inexpensive access to essential medicines. But this situation is reversed when we talk about cutting edge medical developments in the biotechnology sector. Some of the most promising medical technology today is being developed by small biotech start-ups that lack the capital needed to underwrite the kinds of charitable projects that large pharmaceutical companies can fund without batting an eyelash. For small biotech companies, a few million dollars here or there could literally be the difference between success and bankruptcy.

Nonetheless, in order to help fund philanthropy efforts among small biotech companies the Biotechnology Industry Association (BIO) has joined with two of the nation's largest charitable foundations to establish BIO Ventures for Global Health, a joint venture that will help underwrite the development and distribution of new medical technologies to the world's poorest nations. BIO Ventures, with funding from the Rockefeller Foundation and the Bill and Melinda Gates Foundation, will award seed grants of $3 to $15 million to underwrite biotech R&D and design the complex business models needed to supply products for overseas markets where returns on investment may be very small or even non-existent. Global health partnerships like this one are critical in creating a pipeline for cutting edge medicines into developing markets in ways that don't curtail the underlying market mechanisms that sustain medical innovation.

[permanent link]



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