Biden and more Harris jst annouced some drug price cuts thru Medicare….
The Drug industry investors and some Republicans just got bent out of shape….
But the industry itself actually make so much profit that the cuts announced won’t harm them at all….
Between the lines: The announced prices — an overall 22% reduction in net spending but no details on individual drugs’ net price reductions — are less drastic than some feared.
- “There are strong price reductions, but it also shows there is plenty of room for the industry to continue to make some profits on these drugs,” Vanderbilt University’s Stacie Dusetzina said.
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The big picture: If there’s anything everyone agrees on, it’s that America’s high drug prices make up a grossly disproportionate bulk of pharma’s revenue compared with the rest of the world’s.
- Critics — including many politicians from both parties — say all that means is that America is getting ripped off.
- Pharmaceutical companies and some experts say that this subsidization allows drug companies to keep searching for and investing in new therapies despite too-low prices in other countries.
Regardless, that tasked the administration with figuring out how much of a revenue haircut — or a subsidy reduction — drug companies could take without sacrificing the new drugs we want them to continue bringing to market.
- So far, that haircut seems to be pretty manageable.
- “We’ve shown that it can be done successfully and the sky doesn’t fall,” said Harvard’s Aaron Kesselheim. “It’s not surprising to me that the markets haven’t come crashing down, because I think this process was not set up to bankrupt the pharmaceutical industry.”
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