U.S. Politics

Krugman on Drugs

When President Trump introduced the “American Patients First” blueprintfor reducing drug prices, it was inevitable that the Democrats and their media enablers would immediately denounce the plan, the team that put it together, and the President himself. And, when it became clear that Trump wasn’t going to grant Medicare the power to impose price controls on the pharmaceutical industry under the guise of negotiation, our friends on the left didn’t even have to think of any new pretext for their obligatory kvetch fest.

All they had to do was dust off the absurd claim that the only way to truly control drug prices was to unleash the awesome bargaining acumen of CMS bureaucrats on the latter day robber barons of BIG Pharma. Thus, it wasn’t shocking that Paul Krugman’s contribution to the chorus of complaints also included that shopworn argument. It was something of a surprise, however, to see that Krugman so far forgot himself that he let the cat out of the bag concerning why allowing Medicare to “negotiate” drug prices is such a bad idea:

It’s true that simply granting Medicare the right to negotiate prices wouldn’t do much by itself. We’d also have to give Medicare some bargaining power, probably including the right to refuse to cover drugs whose prices are exorbitant. And before you denounce this as “rationing,” remember that before 2003, Medicare didn’t pay for drugs at all.

Think about the logic of that last sentence. One can use precisely the same line of reasoning to justify breaking and binding the feet of a 14-year-old: “Before you denounce this as ‘mutilation,’ remember that before 2003, Jane didn’t have any feet at all.” This is the kind of tortured reasoning that Krugman, et al., must use to reach their otherwise indefensible position. It is certainly the only way a Nobel laureate in economics can claim that allowing Medicare to “negotiate” drug prices won’t destroy the drug market.

There just is no rational way to escape the reality that the federal government does not negotiate prices.It dictates pricesby abusing its elephantine market position. In other words, all Krugman’s preferred policy would accomplish is shortages of badly needed medications. This artificial scarcity would, in turn, mean government rationing of those medications. And who would be hurt the most by this? The most vulnerable patients — the very old and the very sick. If this is “progressive,” I’m proud to be a knuckle-dragger.


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