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DBL%20Hendrix%20small.png College chemistry, 1983

Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: Twitter: Dereklowe

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May 12, 2009


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Posted by Derek

Time, regrettably, for some politics. In case anyone’s wondering, my take on yesterday’s health care announcement by the Obama administration is perfectly stated here. I could not agree more.

In other words, I see the “historic announcement” as nothing more than political theater. Everyone got together, held hands, and pledged to voluntarily do some not-all-that-painful things to reduce costs, some of which (cost savings through better record keeping?) have already been underway for years. Even so, the chances of all of these being followed through are still low. And even if they were, the amount of money being saved is only a small fraction of what would be needed to pay for the administration’s stated health care goals.

None of this would bother me all that much, under normal circumstances. A lot of what goes on in Washington, at least in front of the cameras, is an elaborately choreographed dance. It’s related to real political dealing in the same way that a synchronized swimming exhibition compares to the 1956 Olympic water polo match between the Hungarians and the Soviet Union. But (like Megan McArdle in the Atlantic link above), I worry that the administration will now pretend that these savings are real. When they turn out to be (gasp!) insufficient, a crisis will be declared (you should never waste one, you know), and more persuasive measures will be used. You know, just as in the recent Chrysler “bailout”, a term I can only put in quotes. (Mickey Kaus perfectly sums up my feelings about that one, in that link and here).

Why should I care? After all, my industry should be more or less in the clear, since prescription drug spending is only about ten per cent of the nation’s health care costs, right? Well, my worry is that we’re a very visible (and often disliked) ten per cent, a nail that sticks up and that may well get hammered down pour encourager les autres. I hope I'm wrong. But I think that the Chrysler deal was just a curtain-raiser for an even bigger one in the same style for General Motors, and I hope I'm wrong about that one, too.

Comments (15) + TrackBacks (0) | Category: Business and Markets | Current Events | Drug Prices


1. Bryan on May 12, 2009 10:37 AM writes...

Nothing to worry about. The bills will be covered by the soda (pop?) tax they have been squawking about in NY for the past couple months which might actually go national.

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2. Kevin on May 12, 2009 11:35 AM writes...

American politics needs less Kabuki and more water polo.

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3. jim on May 12, 2009 1:30 PM writes...

Well, perhaps we need to give the pres more than a few weeks to deal with a problem decades in the making? Or maybe I have you guys wrong, and you are really advocating making the leap straight to universal single payer care. No more of this centrist reform business, right? I say this because it's hard to imagine rational, intelligent people who still think the system is "just fine". Even getting past the pesky moral issues, I would think many people who visit this blog would be concerned about one of the primary drivers of outsourcing.

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4. Sili on May 12, 2009 1:41 PM writes...

Single payer would be a start, yes.

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5. Belen on May 12, 2009 2:48 PM writes...

This post and the linked article really irked me.

Considering what companies and workers pay for their health care plans now, what's wrong with giving that money to the government for health care instead? At least they aren't out to profit from you like your HMO is... and people wonder why costs are so high. Higher prices means more profit for your insurance company. Where is the incentive to provide more for less?

It's laughable when people complain about how costly single payer will be. You don't hear the Canadians, French, or Swedish wanting to privatize their systems to save costs. There are countries where single payer works. I don't understand what's wrong with following their example or why the U.S. has to be so different.

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6. fred on May 12, 2009 3:22 PM writes...

Richard Nixon, no liberal, and certainly a towering giant amongst the GOP pantheon given the dreadfulness of recent vintages, wanted single payer, but other matters commanded his attention and it didn't happen. I want single payer, but only if they can allow drug companies to recoup their risk with healthy drug pricing (the two goals should be perfectly compatible).

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7. fred on May 12, 2009 3:22 PM writes...

Richard Nixon, no liberal, and certainly a towering giant amongst the GOP pantheon given the dreadfulness of recent vintages, wanted single payer, but other matters commanded his attention and it didn't happen. I want single payer, but only if they can allow drug companies to recoup their risk with healthy drug pricing (the two goals should be perfectly compatible).

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8. Lukas on May 12, 2009 4:57 PM writes...

Belen, at least there is some semblance of competition left in the health care industry that provides an incentive to save and to offer better quality products. A government bureaucracy is free of market constraints. They have absolutely no incentive to use your money in a way that will benefit you... and don't believe for a second that profit motives will go away once the feds run the show, it'll only be more insidious and even less subject to market discipline (think lobbying by the AMA & "Big Pharma", the-bureaucracy-is-expanding-to-meet-the-needs-of-the-expanding-bureaucracy etc.) There won't be any overall savings as long as people are unwilling to cut back on services (or on malpractice suits for that matter).

A lot of Canadians are crossing the border to get health care in the US, especially for major expenses. I guess they just don't like health care services run by the same philosophy that characterizes your DMV.

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9. Belen on May 12, 2009 6:46 PM writes...

Lukas, I think you might be right, but consider the public education system.

You can argue that the government does a horrible job with education, especially in K-12. There is a bloated bureaucracy with awful teachers who are allowed to remain employed despite incompetence. A lot of parents today opt out and send their children to private schools because they are better. However, while the system is flawed, no one is considering doing away with it and having only private schools.

You can argue that with private schooling the market costs would drive down the price of an education. There would be incentive to provide better schooling for the money. Tax savings would be enormous for everyone except the poor, but they could have a medicaid waver type system that would allow them to go to "participating" schools in their area.

So why not do that? Why would that be so unpopular?

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10. Bored on May 12, 2009 8:57 PM writes...

Come on, guys. Nobody in their right mind should even entertain the idea that Government can possibly run a health care system. History has demonstrated, very clearly, that our government is inefficient, wasteful, short-sighted, bloated, corrupt, and so eaten up with bureaucracy that all it does well is confiscate. It confiscates our money, our rights, our land... Barack The Merciful isn't going to "change" any of that.

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11. jim on May 13, 2009 12:01 AM writes...

Bored, I'm going to assume you don't use roads, traffic signs, postal service, FDA-approved drugs, police and fire services, public schools, etc. since government sucks so much. I guess you can't help but take advantage of the security provided by the military but I'll let it slide.
In any case, what's the problem with a public option, then? Clearly, up against the magnificent private sector, anyone with a choice will choose the private insurance. Those without could sign up for the government plan. And since conservatives are always talking about how most of those without insurance are just healthy young people, the services will probably hardly be used. Right?

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12. Lukas on May 13, 2009 12:42 AM writes...


wherever school voucher programs have been introduced they are very popular among parents. But there are powerful interests that oppose them, first of all the teachers' unions. And there are always people who think that the prime purpose of schools is to make kids into good little citizens. Even so, quite a few states and cities have programs of this kind, and there are others considering to introduce them. It just takes some time for the systemic inertia to be overcome.

When people can't afford health care, the problem is poverty, not the health care system per se. Where health care is artificially expensive due to the medical-industrial-governmental complex, there's little to no hope that that will change under single payer.

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13. pEvans on May 13, 2009 1:54 PM writes...

The bar has been closed for a while, and our drinking buddy has gone home. We can either stay on the stool and throw the remainder of the paycheck on the counter, or wake up with a splitting headache and attempt to move around a bit. Let the barflies talk.

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14. Bored on May 13, 2009 9:20 PM writes...

Jim, you forgot to mention landing on the Moon as something Government does (did) well. To paraphrase Churchill, our government is the worst one, except for all the others. My point is that there is way too much pie-in-the-sky hope pinned on Obama because he looks better and talks better than the previous president. Political labels aside, hero worship is never a good thing.

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15. bad wolf on May 15, 2009 2:25 PM writes...

Maybe it's worrying because when it happens in an area/industry that you do understand, you start to realize that the areas you don't understand must be similarly mismanaged.

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