Senator Elizabeth Warren, in a desperate bid for 2020 relevance, rolled out a plan to create a Office of Drug Manufacturing that would have the government manufacture generic drugs and sell them at a “fair price”.
Let’s sidestep all the obvious free market discussions here about the Affordable Drug Manufacturing Act.
The government doesn’t have the expertise or infrastructure to manufacture drugs. Even Warren probably understands that. It could hire and build some of what it needs, but let’s be realistic, that’s not happening. (And if it did, the actual cost of the medication would be huge.) So instead it’s going to outsource manufacturing generic drugs to existing industry partners.
So Warren is proposing a bill to fight high prices for drugs from the pharmaceutical industry by having the same companies making the same drugs make them for the government. A middleman isn’t being removed. A government middleman is being added.
It’s actually more senseless than that.
Through Medicare, Medicaid, etc, the government is already paying for many of the drugs in question. If the government wanted to force lower drug prices, it already has the negotiating power to do that.
Instead Warren’s proposed Affordable Drug Manufacturing Act will contract with generic drug manufactures to produce drugs at a set price. Why will these manufacturers agree to accept serious reductions in their profits? Because muffins and look, a squirrel.
Either the government will eat the cost of subsidized medications. Or manufacturers will find ways to lower expenses and quality.
Considering how government contractors work, you can assume that the government will subsidize the cost at four times the current price and quality will go down, leading to useless medications that don’t work.
But at least Warren got people to stop talking about her DNA test.