Book TV: Freedomnomics.
Over the past year or two I've made no small amount of fun of my dad for calling me at all hours to tell me about the latest segment he's watched on his favorite program -- Book TV on C-SPAN. Sadly, this past weekend I got sucked into a program myself. I blame genetics.
I watched a talk given by John Lott, author of Freedomnomics, and the 40-minutes or so that I caught was fascinating. When I tuned in he was talking about writing and how it wouldn't be worth it for him to spend a year or two writing a book if he'd only be paid a little over the cost of actually printing the pages. He was using that as an example for the price of drugs in America and the fact that it costs 800 million to a billion dollars and takes 8-10 years to bring a new drug to market. Therefore companies can't just charge twice what it costs to produce the pill and survive.
One explanation he gave that stood out to me was the reason drugs are cheaper in Canada and Mexico, something I have never understood. According to Mr. Lott, apparently there are World Trade Organization rules that force drug companies to come to some sort of price agreement with the government in other countries or the government can take their patent after two years and give it to someone else. In other words, Canada can tell our drug company we'll let you sell this drug for twice what it costs to produce, take it or leave it. If the company refuses, Canada takes the patent and has one of their companies produce it themselves. If that's true, it sure seems like something close to extortion to me...
He also asked us to imagine we were in charge of a drug company, considering beginning the process to find a new cancer drug. What if we thought there was 100%, or even 50%, chance that the next President will be someone who has sworn to do some price fixing on drugs. Would you begin the 8-10 year, billion dollar process or would you decide not to bother? He brought up childhood vaccinations as an example -- since the government has regulated the price we've had no new drugs in that line because the research is too costly.
Which reminds me that the same thing happened with the flu vaccine -- all production went overseas because a certain Presidential hopeful got the price fixed in such a way that it was no longer financially viable for American companies to stay in the business. Thus, when one of the key British producers lost half their year's stock a couple years ago we were left with a shortage.
Finally, a really good point that I think deserves consideration. He said altruism is a wonderful thing. No one wants to charge grandma so much for her drugs that she has to eat dog food because that's all she can afford...but forcing someone else to be altruistic on your behalf is just wrong. Giving cheap or free drugs to our elderly now on the drug company dime is costing the younger generation the benefit of the new drugs they could have researched and developed by the time I become the elderly.
Whether the government should be giving free or cheap drugs to the elderly is another discussion altogether, perhaps plumbing the depths of your feelings about socialism...but we should be able to find another way to care for our aging than forcing the big bad drug companies to foot the bill. Reminds me a little of Ms. Clinton's speech about taking profits from the big bad oil companies and putting it into R&D for alternative fuels...
It's just madness -- either we're a free market society or we should just give into socialism altogether. Threatening companies who choose to excel that we're going to take your money because you did too well is ludicrous. Threatening to lop the heads off the companies who rise above only encourages mediocrity.
