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I am skeptical of the claim above by a U of Chicago economist that price reductions on Medicare drugs will lead to a loss of $18 trillion in GDP.
If fewer drugs are produced for the Medicare market, this could lead to lower life expectancy for seniors. As a senior myself, I am not overjoyed by that….but my untutored question is, “Why does that hurt the economy?”
When seniors live longer, they hold onto to their money, improve their homes, buy cars, and go into nursing homes.
If seniors die a little sooner, their kids get money sooner and they buy homes, et al et al.
I don’t see why GDP would fall at all.
The Daily Signal is a libertarian and conservative publication and I can understand why they want to bash the federal government.
But I am not sure they are right on the economics.
The Economist ran a couple if interesting articles this week. There was a leader titled, “America’s new drug-pricing rules have perverse consequences,” and another in the business section, “America’s plan to cut drug prices comes with unpleasant side-effects.”
The gist was that the new rules would likely stifle development of small molecule drugs in favor of injectable, large molecule “biologics,” and that manufacturers will likely delay new drug introduction for small patient populations with rare or end-stage conditions, until the drug is approved for the largest markets, in order to game the pricing clock.
If a price reduction on a drug for rheumatoid arthritis benefits 2 million seniors — and the cost is a delay on a specialty drug for 9,000 sufferers from a rare blood disorder….well, I would consider that an acceptable trade-off.
I am not a fan of perfectionist public policy.