Even as the pharmaceutical industry has been colluding with Washington in hopes of having healthcare “reform” be favorable to its bottom line, Congress has been investigating the industry’s pricing practices — and politicians don’t like what they see. They’re upset that certain drugs — those that are sold to smaller numbers of patients than, say, a blockbuster like Lipitor, but that are no less important to the patients who need them — have had huge price increases over the past decade, whereas “bigger” drugs have had smaller increases.

As the New York Times explains, sometimes these price increases happen when larger pharmaceutical companies sell off the smaller-market drugs in their portfolio, and the smaller drugmaker that purchases the drug immediately raises the price in order to profit from its investment. Or the price increase happens via a third-party distributor who purchases the drug from a pharmaceutical company and then resells it to hospitals and pharmacies. Or, the original maker of the drug might have raised the price.

Chuck Schumer, who I’m disgusted to say represents my state, exhibited the typical attitude when he said, “It is hard to find a good-faith explanation for why drug prices could go up this much. This report will lead to a strong demand for action by Congress.”

By “good-faith” he means altruistic; he means that pharmaceutical companies should continue to innovate and produce drugs, not out of pursuit of profits, but out of brother-love for anybody with a medical condition. But don’t expect the kind of great minds that are needed for drug development to work as slaves or to allow themselves to be punished because their work is more vital to man’s survival than others’.

In fact, although Schumer would like to blast the pharmaceutical industry for seeking “excessive” profits, there’s a much more obvious explanation for why the industry has raised prices, and it’s Washington that is abased thereby, not the pharmaceutical industry.

As the article points out, “drug makers’ labs have been unusually barren, and…without new products, drug makers view price increases as among the only ways to reliably increase profits.” That is, drug companies need to increase prices on the products they have in order to stay afloat despite meager pipelines…but why are those pipelines so meager? You can thank the FDA for that — see my article from the Fall 2008 Objective Standard for details on how the FDA kills innovation.

Senator Schumer, the solution is not action from Congress — unless by “action” you mean action to remove your bureaucratic tentacles from medicine!

reasonpharm.blogspot.com