5 months ago

Controlling the price of drugs

Can the government lower the price of prescription drugs? The effects of price ceilings provide a cautionary warning, even though price controls appear to work in other countries. Unfettered competition generally provides a more effective way to keep prices in line with costs.

Several government efforts seek to lower drug prices. The Trump Administration has proposed basing Medicare Part B prices on international prices. The Department of Health and Human Services found that the U.S. had the highest average price for 27 drugs, almost double the international average. Forty six states are suing 15 generic drug makers for price fixing. Senator Elizabeth Warren wants the Federal government to manufacture generic drugs to eliminate profit-seeking.

Price ceilings demonstrate government’s rather limited ability to reduce prices and ensure adequate supplies. A price ceiling is a legal maximum price for a good. For instance, a law might set a maximum price for gasoline at say $2 a gallon and prosecute anyone selling for more. Would this ensure drivers reasonably priced gas?

Not really. Market transactions require a willing buyer and seller. Businesses aren’t charities and will not operate at a loss. While occasionally businesses sell at a loss, they must normally expect to cover costs.

A price ceiling does not require any firm to sell. If the wholesale price of gasoline were $2.50, a station facing a $2 price ceiling will shut down. Price ceilings set below the market price produce shortages, meaning that some consumers will go without.

Price ceilings have long been popular with emperors and legislatures, as Forty Centuries of Wage and Price Controls details. Price controls were included in ancient Babylon’s Code of Hammurabi and contributed to the suffering of George Washington’s army at Valley Forge. A lower legal price appears to benefit consumers but does not make the good available.

Pharmaceutical companies charge more than $10,000 a month for some cancer drugs. To the extent that such prices reflect costs of research, development and manufacture, setting a $5,000 legal maximum price will reduce the quantity of drugs available. A shortage of life-saving drugs costs lives.

The development and approval process accounts for much of the cost of drugs. According to Tufts University’s Center for the Study of Drug Development, the development costs for drugs that reach the market are $2.6 billion. The cost of manufacturing many drugs is often low. Price controls may not prevent sales of already developed drugs, but rather reduce development of new drugs.

If price controls are generally ineffective, why do other countries pay less for prescription drugs than we do? Restrictions on importation allow the same drug to sell at different prices in different countries. If a company sells at a price covering most of the development cost on the U.S. market, it could accept a lower price in Europe. This makes price ceilings appear effective. Yet someone must pay for development costs. If we match other nations’ low prices, we may not have future wonder drugs.

Instead of resorting to price controls or litigation, I think we should try more competition. Let’s let pharmaceutical companies undercut each other’s prices in the pursuit of profit.

Two sets of policies currently limit competition. One is patents for medicines. Patents grant inventors a temporary monopoly to allow them to earn back the costs of research and development. The second is the Food and Drug Administration’s (FDA) approval, which requires demonstration of a new drug’s safety and effectiveness. Limiting competition facilitates price fixing as well.

Limited competition in generic drugs, whose patents have expired, illustrates the vulnerability of government rules to manipulation for profit. Generic drugs copy successful drugs and are clearly safe and effective, yet the FDA’s approval process limits the number of producers. Smart and greedy companies profit by manipulating the rules, like finding generics without approved alternative producers and raising the price.

More government regulation will not end the profitable manipulation of government rules, it will only create more rules to manipulate. Streamlining the patent and drug approval processes offers a better path to a steady supply of reasonably priced pharmaceuticals.

Daniel Sutter is the Charles G. Koch Professor of Economics with the Manuel H. Johnson Center for Political Economy at Troy University.

9 hours ago

University of North Alabama adopting new tuition plan

The University of North Alabama is switching to a tuition plan that officials say will result in increased costs for some students but not others.

Officials at the school in Florence say they are reducing the total number of student fees from seven to one, and fees will be included in the overall tuition cost.

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A statement says students taking 15 hours will see a maximum increase in expenses of 4.1%.

But some could pay less, and costs will not change for others.

School officials say a lag in state funding is a continuing problem.

North Alabama’s vice president for business, Evan Thornton, says the school has deferred maintenance and capital needs totaling more than $160 million.

The school has an undergraduate enrollment of about 6,200 students.
(Associated Press, copyright 2018)

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10 hours ago

Nathan Lindsay joining governor’s office from BCA

Another high profile staffer from the Business Council of Alabama (BCA) is joining Governor Kay Ivey’s senior level team.

The governor on Monday announced that Nathan Lindsay will join her office as director of appointments effective July 1.

This position is charged with spearheading the meticulous work that goes into Ivey meeting her duty to appoint qualified, representative and appropriate people to positions on the state’s various boards and commissions.

A press release from the governor’s office outlined that Lindsay assumes the role with an extensive background in state government and the private sector, which uniquely qualifies him to advise the governor in this capacity.

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Most recently, through his work in political and governmental affairs at the BCA, Lindsay interacted with members of the business community throughout the Yellowhammer State, which significantly adds to his ability to identify and select candidates for various appointed posts.

Additionally, Lindsay’s early career included time in then-Governor Bob Riley’s office where he served as aide to the governor from 2006 to 2011. Lindsay also worked in the governor’s communications office as deputy press secretary and advised Riley on education policy.

“Nathan brings to our team a wealth of knowledge that I know will serve the state well,” Ivey said in a statement. “In addition to his expertise and insight, Nathan is a man of character. The men and women of my staff must have a strong work ethic, a depth of knowledge and a heart for public service. Nathan certainly embodies all of these characteristics.”

Lindsay earned his bachelor’s degree from Faulkner University. During his time at Faulkner, he served as SGA president and later, in 2018, he was awarded the Distinguished Alumni Award for the College of Arts and Sciences.

“As governor, I have the important responsibility of appointing qualified individuals to serve on the more than 450 boards and commissions in our state. These men and women must not only be highly-qualified, but they should also be a true reflection of our great state,” Ivey added. “I am confident we will continue to find the best people to serve our state, just as I am certain Nathan will serve my Administration exceptionally well in this position. His experience speaks for itself, and he shares my goal of moving Alabama into a better future.”

This comes weeks after Leah Garner departed BCA to become Ivey’s communications director.

Mark Colson also left BCA to become head of the Alabama Trucking Association recently.

Update 5:55 p.m.:

BCA President and CEO Katie Boyd Britt released a statement commending Ivey on the hire of Lindsay.

“Nathan’s background and expertise in political affairs combined with his political acumen uniquely qualify him to serve the governor and the state in this capacity,” Britt said. “I have no doubt Nathan will do an outstanding job, and I commend Governor Kay Ivey on this excellent addition to her staff.”

Sean Ross is a staff writer for Yellowhammer News. You can follow him on Twitter @sean_yhn

10 hours ago

Alabama listed as one of the top 20 most patriotic states in America

A WalletHub report released Monday revealed Alabama to be on of the top 20 most patriotic states in America.

Ranked 19 overall on the list, with a score of 47.43, Alabama ranked first for the “Civics Education Requirement.”

The report “compared the 50 states across 13 key indicators of patriotism” and “ranges from share of enlisted military population to share of adults who voted in the 2016 presidential election to AmeriCorps volunteers per capita.”

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With one as “Most Patriotic” and 25 as “Average,” Alabama received the following rankings:

  • 5th – Average Number of Military Enlistees per 1,000 Civilian Adults
  • 30th – Active-Duty Military Personnel per 100,000 Civilian Adults
  • 17th – Veterans per 1,000 Civilian Adults
  • 1st – Civics Education Requirement
  • 12th – Share of Civilian Adult Population in Military Reserves
  • 10th – Share of Adults Who Voted in 2016 Primary Elections

Alabama also ranked eight overall for ‘Military Engagement.’

The report, which compared red states to blue states in terms of patriotism, found that red states were more patriotic. Red states received an average rank of 23.67, while blue states received an average rank of 28.25.

Kyle Morris also contributes daily to Breitbart News. You can follow him on Twitter @RealKyleMorris.

11 hours ago

Brooks: ‘Really dumb’ for Democrats to elect candidates mainly on ‘skin pigmentation or their chromosomes’

In an interview on WVNN’s “The Dale Jackson Show”on Friday, Congressman Mo Brooks (AL-05) lamented that many Democrats have become more interested in racial and gender identity politics than the welfare of America.

Coming off of her much maligned comments comparing American immigration facilities to “concentration camps,” host Dale Jackson asked the north Alabama congressman if he believes that Democrats in Congress will allow Rep. Alexandria Ocasio-Cortez (D-NY) to continue to serve as their “de facto face and leader.”

“Yes,” Brooks answered succinctly, promoting a follow-up request for his reasoning.

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“Well, she is where she is,” Brooks explained. “She’s got a lot of political power. She’s got a lot of support — surprisingly.”

“There are large, large numbers of American citizens who have bit off on this socialist stuff, who have bit off on this victimization stuff, who have bit off on thinking that the most important criteria in determining whether to elect someone is their skin pigmentation or their chromosomes — which is really dumb, OK,” he continued. “We oughta be electing people based on their character and based on their public policy positions.”

“But, notwithstanding that, Alexandria Ocasio-Cortez has become the face of the Democratic Party in many different respects, and she does have great influence as evidenced by the presidential candidates on the socialist Democrats’ side who are trying to cultivate her support,” Brooks added. “They want her endorsement.”

Listen, starting at the 8:25 mark:

Sean Ross is a staff writer for Yellowhammer News. You can follow him on Twitter @sean_yhn

12 hours ago

Democrats hope it’s 2017 all over again, Republicans just want the nightmare to end

In 2017, Roy Moore won a Republican primary run-off against an extremely flawed Luther Strange. Strange wasn’t just a regular candidate — he had the cloud of his appointment, and he was dogged by former Gov. Robert Bentley’s investigation, impeachment and resignation.

Alabama Republicans, outside of U.S. Senator Richard Shelby (R-AL), were reluctant to criticize Roy Moore because they knew doing so would hand the Senate seat to now-Senator Doug Jones (D-AL).

But this is different.

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State Senate Pro Tem Del Marsh (R-Anniston) told the Montgomery Advertiser that he blamed the GOP establishment in 2017, but still thinks Moore can’t win in 2020.

He stated, “I do not believe, with the numbers I look at, that Roy Moore at the end of the day can get the nomination.”

State Senator Arthur Orr (R-Decatur) dismissed Moore when asked about the candidates, saying, “If you look at the candidates, you got Roy Moore. I don’t think we need to say more there.”

Later, he all but endorsed U.S. Representative Bradley Byrne (R-Fairhope) by saying Byrne “would do the best job.”

Secretary of State John Merrill, a potential future Moore opponent, believes Moore has an uphill battle against Jones.

“I think it would be extraordinarily difficult for Judge Moore to be successful in a general election campaign against Senator Jones,” Merrill outlined.

He added, “I also think it would be difficult for Judge Moore to secure the Republican nomination.”

Congressman Mo Brooks (R-Huntsville), who endorsed Moore in 2017, has already endorsed State Rep. Arnold Mooney (R-Indian Springs) and is on record saying former U.S. Senator Jeff Sessions would be a favorite.

“I do believe that Jeff Sessions would clearly be number one in the poll rankings, based on his having been such a great senator on three principle issues: free enterprise versus socialism; deficit and debt; and border security,” he explained.

Say what you will, but you do not usually see these kinds of pronouncements from Republicans in the middle of a primary.

Democrats hope 2017 is going to be repeated in 2020, but there are many different factors that will matter.

Roy Moore is already fatally flawed as 300,000+ Republicans voters abandoned him in 2017 and stayed home. Many of those voters will vote in the primary in 2020, but will not vote for him.

U.S. Representative Mike Rogers (R-Saks) expressed a similar sentiment on CSPAN last week.

“I personally don’t think Roy Moore is going to be our nominee, but whoever our nominee is will prevail in November because you’ll have the full complement of Republican voters turning out turning out to vote,” he said.

This is not 2017.

Dale Jackson is a contributing writer to Yellowhammer News and hosts a talk show from 7-11 am weekdays on WVNN.