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InsiderOnline Blog: October 2004

How the Story Ends

Heritage's Andrew Grossman and Edmund F. Haislmaier spoil the ending of Kerry's story on health care using this year's flu vaccine shortage as the model. I'll give you three guesses what caused that shortage (hint: rhymes with "hovernment megulation").

Essentially, Sen. Kerry thinks it’s time for the government to start setting drug prices. But after this year’s flu vaccine shortage, we know how that story ends.

Government negotiation could drive down prices for a few years with little noticeable effect. But when there is a public health crisis -- as happens unpredictably -- what manufacturer is going to have the spare capacity and ability to churn out extra Cipro or smallpox vaccine on short notice? Without a fair chance of making a profit, no drug maker could justify the expense of keeping such capacity at the ready.

And what drug maker could justify the expense, and risk, of developing new drugs?

Sen. Kerry should himself “play straight with the American people” and admit that his plan for buying drugs in Medicare relies on the same factor that caused the vaccine shortage. Fixing the problem won’t happen as long as economic sense, and not just vaccines, remain in short supply.

Come to think of it, I just spoiled the ending of their column. Sorry about that, guys, but it's really good. Read it all and pass it on to those who have not already learned this lesson.

 

Posted on 10/22/04 12:04 PM by Mary Katherine Ham

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