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Is the US government not already negotiating the prices for cars and food it buys?

by cerved 2y ago

doctorpangloss 2y ago
I'm not sure why you are being downvoted. Import bans on food and vehicle tariffs suggest the US has to deal with a lot of complexity regarding cars and food prices. Drugs are no exception. If only there were any easy answer.
twoodfin 2y ago
If the Secret Service doesn’t like what GM charges for a few dozen black Escalades, they can’t take a haircut on GM’s revenue for every one it sells to the general public. But that’s how the IRA works. Also, the way Medicare Part D was set up, the government doesn’t buy the drugs in the first place. Private insurers negotiate their rates and then are reimbursed. They already have significant market incentive and power to negotiate lower prices.
AnthonyMouse 2y ago
The US government typically puts out purchases for bidding. They need so many SUVs of a particular size so they receive bids from Ford and GM and whoever else and pick the lowest bid that satisfies the contract. They aren't setting the price, the sellers are, by bidding on the contract. The government just picks the lowest one. The issue with drugs under patent is that the alternatives are often not as good. If the FBI needs a vehicle, it doesn't really matter if it's a Ford or a Chevy, but sometimes a drug under patent is quite a lot better than the available generic and then the seller can command a much higher price than the competition. Which is whole point of the patent system. In exchange for funding the research/trials you get a temporary monopoly on the drug and get to charge the monopoly price until the patent expires. They're now proposing a different system where instead of taking bids, the government dictates the price and can blacklist the entire drug company if they don't accept the government's price for every individual drug. That's price controls and the result is consistently under-production. For commodities that means shortages, for R&D it means fewer new drugs.

Is the US government not already negotiating the prices for cars and food it buys?

by cerved 2y ago

Is the US government not already negotiating the prices for cars and food it buys?

I'm not sure why you are being downvoted. Import bans on food and vehicle tariffs suggest the US has to deal with a lot of complexity regarding cars and food prices. Drugs are no exception. If only there were any easy answer.

twoodfin 2y ago

If the Secret Service doesn’t like what GM charges for a few dozen black Escalades, they can’t take a haircut on GM’s revenue for every one it sells to the general public. But that’s how the IRA works. Also, the way Medicare Part D was set up, the government doesn’t buy the drugs in the first place. Private insurers negotiate their rates and then are reimbursed. They already have significant market incentive and power to negotiate lower prices.

AnthonyMouse 2y ago

The US government typically puts out purchases for bidding. They need so many SUVs of a particular size so they receive bids from Ford and GM and whoever else and pick the lowest bid that satisfies the contract. They aren't setting the price, the sellers are, by bidding on the contract. The government just picks the lowest one. The issue with drugs under patent is that the alternatives are often not as good. If the FBI needs a vehicle, it doesn't really matter if it's a Ford or a Chevy, but sometimes a drug under patent is quite a lot better than the available generic and then the seller can command a much higher price than the competition. Which is whole point of the patent system. In exchange for funding the research/trials you get a temporary monopoly on the drug and get to charge the monopoly price until the patent expires. They're now proposing a different system where instead of taking bids, the government dictates the price and can blacklist the entire drug company if they don't accept the government's price for every individual drug. That's price controls and the result is consistently under-production. For commodities that means shortages, for R&D it means fewer new drugs.