On Friday, California Governor Gavin Newsome will unveil his new state budget. In the budget, he is expected to unveil a new initiative for California to tackle drug prices. He is calling for California to start their own generic prescription drug company to sell medications at a lower cost to residents.
While the plan is still in conceptual stage, the suggestion by Newsome is that this will generate greater competition for the marketplace to drive costs lower. The plan calls for labeling medications under California’s own branding to sell. In a statement, Newsome says it should not cost a months pay to visit a hospital, medical clinic or the pharmacy.
That statement shows how out of touch that Newsome is with healthcare in general. While hospital visits do come at a premium, most clinics and pharmacy visits do not. There are multiple generic drug programs that exist to provide free and discounted medications to patients. These are typically the most popular and common medications. A lot of the discussion around medications have come in regards to speciality medications. Brand name medications, which would not be addressed in this plan.
Newsome is also proposing a prescription drug pricing schedule. This would require prescription manufacturers to bid to sell their medications at restricted pricing in the state. But, is this really a plan or the start of a government takeover? Personally, I believe it’s the latter.
Government regulations have never benefitted in regards to costs. This US News article talks about the rapidly rising prescription drug prices, but a lot is tied to government regulation. The author argues that drug safety and efficacy is important, but if the drug is not affordable, the patient will not comply. I completely agree. We need affordable medications in the United States, but not at the expense of more regulation.
If California proceeds in this route, there are two potential options that I see happening. Option one will lead to manufacturers raising pricing on other medications to recover lost revenues on the generic medications. This will be easy to observe and the increase in pricing over the last 20 years supports this. As the regulations and testing requirements have increased, so have the pricing of the new medications that are not generic.
The second option is that the businesses decide it’s not worth selling the medications on their own. California will end up subsidizing a lot of the medication to make it more affordable and these companies will quit selling. Competition leaves the market and we end up with a government run pharmacy. With how well California and any government runs anything, the last thing we need them running is a pharmacy.
But this should be a wakeup call to everyone going into the 2020 election cycle. I’ve commented before that I believe that healthcare will play an important part in the 2020 election. Democrats propose taking over the healthcare system and now a proposal to take over prescription drugs. At this rate, it will not be long until we live in a country where the government will decide if you are important enough to receive your medications or not.
Trust me, I’m not trying to fear monger with this statement. I’m simply stating the facts. Democrats options are to let the government take it over. The last thing we need is a government run healthcare and a government run prescription system. Sadly, these are the only options that the left can come up with.
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