Obama’s Manipulation of Drug Companies: A Scandal, But No Surprise

by | Jun 13, 2012

The New York Times reports that a new trove of emails shows President Barack Obama’s White House agreed to help drug companies block a proposal to bring down medicine prices so they would back Obama’s healthcare plan. House Republicans obtained the three-year-old correspondence between the Obama administration and representatives of the drug industry and released […]

The New York Times reports that a new trove of emails shows President Barack Obama’s White House agreed to help drug companies block a proposal to bring down medicine prices so they would back Obama’s healthcare plan.

House Republicans obtained the three-year-old correspondence between the Obama administration and representatives of the drug industry and released more of them to the public on Friday, The New York Times reported.

The exchanges show the compromises as they were being negotiated that laid the groundwork for the health care law now awaiting the judgment of the Supreme Court.

It’s amazing. Socialized medicine is supposed to take price, cost and business out of medical care. That’s why so many support government coverage. You’re covered, it’s paid for, and you no longer have to worry about cost. What could be wrong with that?

Yet as these reports show, ObamaCare could not have even passed without “negotiations” which mimic those of a business. You cannot escape cost, not even if you’re the great and mighty Obama.

There’s one important difference between the “negotiations” of politicians and private companies, as opposed to negotiations within or between private companies. The politicians have the force of law behind them.

It’s really no different from the Mafia—except the government has an easier time than the Mafia. The Mafia must do things under cloak and dagger. The Mafia does not have a police force, an army of regulators and a literal military behind them. A government does. We call it “negotiation” between Obama and the drug companies, but it’s really no such thing. Negotiation is absent the moment you’re forced to do something against your consent.

The emails may represent a scandal, but they should not come as a surprise. (Nor will they be treated as a scandal by a media and establishment which for the most part gives the hapless Obama a free ride on everything.) The moment government becomes involved in business is the moment both government and business are forever altered.

Pricing is actually a form of communication between customer and producer. A drug company prices its products based on supply and demand, just like any other company. If prices are high, this is an indication that the drug company must produce more. In a free market, a drug company would be glad to produce more—because it would mean more profit.

As supply caught up with, and even surpassed, the demand of doctors and patients for certain drugs, the price would eventually come down. We see the same thing at work with the general declining cost, over the years, of computers, smart phones and other technology. If government stayed out of the way, the same would happen with drugs.

The problem is that politicians, especially ones like Obama, resent the fact that drugs are even for sale at all. They believe that medical care and drugs are not commodities. They believe that these things are inherent rights.

What they evade is the fact that drugs must be discovered, created and manufactured by somebody. Manufacturing is key. We could have a team of brilliant scientists, so brilliant they might even discover a medication to cure cancer once and for all. This discovery would mean nothing without a company, or companies, willing and able to bring this product to market.

Obama and other advocates of socialized medicine feel, “How dare you charge for drugs. How dare you make a profit. People need these drugs to survive.” So what are drug companies supposed to do? Build factories, establish laboratories, pay sophisticated researchers, employ laborers—all for free? Nobody is prepared to go this far, but nearly everyone stands ready to condemn drug companies for making a profit.

Others claim, “It’s OK for drug companies to make a profit. Just not too high a profit.” But just how high is “too” high? Where do you draw the line—and why do you draw it there? No answer is given, because this isn’t even an objective claim. It’s all based on emotion, as everything related to Obama and socialism is. It’s pure emotion, which has nothing to do with science or business, and will never ever save lives.

The main reason drug prices are high is because there’s a heck of a lot of demand for them, for obvious reasons. No matter how great a supply drug companies produce, the demand will nevertheless be high. This will tend to make the cost of drugs higher than the cost of other, less valuable things, such as chewing gum, pencil erasers or paper clips.

High prices are a form of communication between supplier and consumer.

High prices are a way of a consumer saying, “Make more!” Unfortunately, government is very involved in the prescription drug industry. It regulates the heck out of this industry. It drives costs higher than they would otherwise be. This is true of all government regulations.

People blame this fact on business, not on government. But it’s government who’s making things more expensive by micromanaging the prescription drug industry. Nothing happens in pharmaceuticals without FDA involvement. And the FDA, like all government bureaucracies, takes forever to do things and doesn’t really answer to anyone.

Also, government pays for most prescription drugs through the Medicare program. Once ObamaCare is online, the government will be paying for almost everyone’s drugs. This means that government slaps even more controls and restraints on the drug industry. After all, they’re picking up the tab for most of them. The Obama emails reveal this. Yes, it’s a scandal—but none of it should come as a surprise.

If government stayed out of the drug industry completely—beyond the obvious prosecution of fraud, where it existed—then drugs would ultimately be cheaper and easier for consumers to purchase. People (along with their doctors) could select their drug providers in a competitive marketplace, not unlike they currently buy groceries or smart phones. The IDEA of this is repugnant to many people, especially Obama and others who detest profit and business, especially in medical care.

So we’re stuck with Big Government micromanaging our medical care, more than most of us really understand.

The American people continue to tolerate and even endorse this state of affairs—at the cost of their own health, and even their own lives. If you ask me, that’s the real scandal.

Dr. Michael Hurd is a psychotherapist, columnist and author of "Bad Therapy, Good Therapy (And How to Tell the Difference)" and "Grow Up America!" Visit his website at: www.DrHurd.com.

The views expressed above represent those of the author and do not necessarily represent the views of the editors and publishers of Capitalism Magazine. Capitalism Magazine sometimes publishes articles we disagree with because we think the article provides information, or a contrasting point of view, that may be of value to our readers.

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