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Commentary

May Reagan GOP R.I.P
Robert Goldberg, Ph.D., Washington Times, 10-26-05

Goldberg, a senior fellow at the Manhattan Institute’s Center for Medical Progress, argues against Congressional plans to finance budget savings by ill-considered changes to how Medicaid treats prescription drug spending:

Rep. Joe Barton and Sen. Charles Grassley, respectively the chairmen of the House Energy and Commerce and Senate Finance Committee, were supposed to come up with ways to reduce Medicare and Medicaid spending. Instead, they actually increase it, specifically by asking taxpayers to pick up the full cost of Medicaid in Alabama, Mississippi and Louisiana (that's on top of health-care funds for the victims of Katrina in those states), raising physician fees paid by the two programs by about $10 billion a year, and adding middle-class families to those entitled to Medicaid or state-run children's health plans.
Both chairmen propose to pay for this spending spree by imposing price controls on all drugs. Prices for drugs could not be higher than a new federal formula; particularly newer medicines that allow people to get their cancer care at home instead of the hospital. And for good measure, both lawmakers plan to eliminate generic-drug competition -- from brand drugmakers -- in order to enrich other generic drugmakers. Quite simply, if a brand drug company wants to take any of its products generic, Messrs. Barton and Grassley would have Medicaid -- which gets the best price companies give to private health plans -- use the generic price as the government-set price for remaining brand name business.

Goldberg notes that drug price controls don’t even achieve their stated goal—saving money—because requiring doctors to prescribe older, less effective medicines can actually drive up total costs.



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