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Drug Companies R Bad, M'Kay?

Monday, November 14, 2005
Exhibit A: A big story in the NYT about how declining sales are forcing pharmaceutical companies to cut "research" budgets. What the article fails to reveal is that the vast majority of expenditures in the "research" line item is market research. It's not about developing the cure to the common cold - it's about figuring out how to get people to buy the same product with a different name to fix a different imaginary problem. Why is the press corps so full of fools?

Exhibit B: The Medicare Prescription Drug Plan. Nobody can understand this damn thing. The only apparent purpose was to shovel out a bunch of taxpayer money to the drug companies and to help some conservative Congressman get re-elected. Well the first part seems to be working out, anyway. I've had like a million questions about the program, I've attended forums explaining how it works, and all I can do is scratch my head. Even Paul Krugman is confused.

The confusion surrounding this proposal does indicate one thing to me, however: treating health care as a market is a guaranteed disaster. The decisions are too complicated and the choices too scary for people to make intelligent consumer decisions. Getting medication or surgery is not like buying a car. Frankly I think this situation calls into question the entire conception of the person as parlayed by economists. People are NOT rational self-interested utility maximizers. No one has the time or energy to figure out complicated systems like this.

Of course, it's always possible that the real purpose behind the prescription drug plan would be to make a health care proposal so screwed up as to discredit the idea of national health insurance.....
Posted by Arbitrista @ 7:33 AM
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