Regulations Cannot Lead to Lower Cost
April 26, 2016
According to aStar Tribune article, the Minnesota House DFL has offered several suggestions to “reduce prescription drug cost;” however, the DFL does not realize that it is impossible to dictate lower cost. The first suggestion by Representative Joe Mullery would require drug companies to file an annual report detailing the marketing cost of drugs that cost over $1,000 annually. The problem with this idea is that all this will lead to is the drug companies spending more time and money preparing a specific report that they did not have to prepare before. The only way that they can recover those costs is to charge more money for the drugs. Additionally, how does knowing how much a company spent on marketing going to reduce a drug price? The article cites the case of Martin Shkreli, who increased the cost of a medication for AIDS from $13.50 to $750.00 per pill. What the story forgets to mention is that, shortly after Shkreli raised the price, another company called Imprimis Pharmaceuticals entered the market with a $1-per-pill alternative. The public outrage at Shkreli is good and ultimately what probably led to the alternative pill’s production, but the Shkreli case cannot be used as an example of insane drug prices. The next proposal is from Representative Joe Atkins, who wants to require healthcare providers to produce an estimate of out-of-pocket cost and then restrict them from charging more than ten percent. This proposal also has nothing to do with reducing cost, because it will force hospitals to spend money formulating estimates. That does not mean that better informing customers of expenses is a bad idea, but the idea that this will save money is folley. The article also included bipartisan interest in looking at medical-assistance fraud, which is a good proposal, considering a Legislative Auditors report that exposed it. The report claimed that an estimated $115 to $271 million was paid to people who were not eligible for medical assistance. Both of these proposals should be considered in the 2016 legislative session, but any claims that they will reduce cost are blatantly false.