By lowering prices for drugs, for example, more people can afford them but pharmaceutical firms have lower profit incentives to find new drugs. The medical device tax, furthermore, will help fund Obama care but also reduce incentives to develop new medical devices.
Depends on the price elasticity of demand. If you widen the access to the thing by lowering the price, it’s possible that you might make more profit than someone who has fewer customers who they make a lot more profit per customer off of.
Setting a price isn’t necessarily a decision made with respects to the interests of one company. Not knowing precisely how the marketing groups for medical goods in the US are set up, beyond that they’re pretty abusive, I don’t care to argue that one way or the other though.
Expanding coverage and lowering prices are two different issues.
You can be in favor of one and not the other.
Big Pharma was in favor of Obamacare. The made a deal. Obama didn’t choose to implement effective price cutting policies such as allowing reimportation of drugs. Then Big Pharma spend millions for advertisements to promote Obamacare.
(1) Blackmail—Obamacare harmed them, but big Pharma was told by Democrats that if they didn’t support it the Democrats would pass something that harmed them even more. The medical device industry didn’t support Obamacare and as a result they got hit with a special tax in the final bill.
(2) Reduced competition—Obamacare makes it harder for other firms to enter the pharmaceutical industry.
As far as the medical device tax goes, I agree that it’s worth repealing it.
In total it’s however zero sum for spending on healthcare. The tax pays for tax rabates for health insurance. Money payed into the health insurance system gets spend on medicial expenditures.
You assume that money is the only reason for people to to develop new medical devices. People could also do so because it helps people. Because the technology is awesome. Any number of other reasons. There is ample evidence that creative workers are DE-incentivized by money.
If money IS the only incentive, then reduced profits on device A might cause them to expand by developing device B.
Money isn’t the only incentive but it is an important one especially for publicly traded companies. You need lots of money to develop and test new medical devices.
There is ample evidence that creative workers are DE-incentivized by money.
If this were true then companies that succeed in producing new, creative high tech products would pay their most creative employees very little. We don’t observe this.
If this were true then companies that succeed in producing new, creative high tech products would pay their most creative employees very little. We don’t observe this.
Have you seen the music industry recently? ;) [/not sure if serious]
I meant that I wasn’t sure if I was being serious or not.
The people who make the most money in the music industry aren’t necessarily the ones doing the best creative work. For one, “ability to sell records” is imperfectly correlated with music quality, the people that are most visible might not even be all that responsible for the music in the first place, and the revenues from sales can end up distributed in all different ways. There might be composers writing songs that turn into hits when other people perform them who end up getting paid peanuts for doing it. I just don’t know.
You assume that money is the only reason for people to to develop new medical devices. People could also do so because it helps people. Because the technology is awesome. Any number of other reasons.
There are only limited resources available, including the creativity and time of engineers, and we need a way to allocate them over our (virtually) unlimited needs. If we’re not going to use a market to make those sorts of decisions, what should we do?
It may seem heartless to pass over a drug which could ‘only’ save a few thousand lives, but even if you can’t put a dollar price on human life there’s still an opportunity cost in other lives which could be saved by using medical resources more effectively. A functioning healthcare market ought to look something like triage; people who gain the most benefit from medical attention will receive prompt and effective service, while some people are unfortunately going to have to be turned away.
By lowering prices for drugs, for example, more people can afford them but pharmaceutical firms have lower profit incentives to find new drugs. The medical device tax, furthermore, will help fund Obama care but also reduce incentives to develop new medical devices.
Depends on the price elasticity of demand. If you widen the access to the thing by lowering the price, it’s possible that you might make more profit than someone who has fewer customers who they make a lot more profit per customer off of.
In situations where this is the case, the company in question doesn’t need to be ordered by the government to do this.
Setting a price isn’t necessarily a decision made with respects to the interests of one company. Not knowing precisely how the marketing groups for medical goods in the US are set up, beyond that they’re pretty abusive, I don’t care to argue that one way or the other though.
Expanding coverage and lowering prices are two different issues.
You can be in favor of one and not the other.
Big Pharma was in favor of Obamacare. The made a deal. Obama didn’t choose to implement effective price cutting policies such as allowing reimportation of drugs. Then Big Pharma spend millions for advertisements to promote Obamacare.
Two possible reasons:
(1) Blackmail—Obamacare harmed them, but big Pharma was told by Democrats that if they didn’t support it the Democrats would pass something that harmed them even more. The medical device industry didn’t support Obamacare and as a result they got hit with a special tax in the final bill.
(2) Reduced competition—Obamacare makes it harder for other firms to enter the pharmaceutical industry.
As far as the medical device tax goes, I agree that it’s worth repealing it.
In total it’s however zero sum for spending on healthcare. The tax pays for tax rabates for health insurance. Money payed into the health insurance system gets spend on medicial expenditures.
Note: spending on healthcare =/= improvements in health
I don’t claim it does.
You assume that money is the only reason for people to to develop new medical devices. People could also do so because it helps people. Because the technology is awesome. Any number of other reasons. There is ample evidence that creative workers are DE-incentivized by money.
If money IS the only incentive, then reduced profits on device A might cause them to expand by developing device B.
Money isn’t the only incentive but it is an important one especially for publicly traded companies. You need lots of money to develop and test new medical devices.
If this were true then companies that succeed in producing new, creative high tech products would pay their most creative employees very little. We don’t observe this.
Have you seen the music industry recently? ;)
[/not sure if serious]
It was serious, but see this.
I meant that I wasn’t sure if I was being serious or not.
The people who make the most money in the music industry aren’t necessarily the ones doing the best creative work. For one, “ability to sell records” is imperfectly correlated with music quality, the people that are most visible might not even be all that responsible for the music in the first place, and the revenues from sales can end up distributed in all different ways. There might be composers writing songs that turn into hits when other people perform them who end up getting paid peanuts for doing it. I just don’t know.
There are only limited resources available, including the creativity and time of engineers, and we need a way to allocate them over our (virtually) unlimited needs. If we’re not going to use a market to make those sorts of decisions, what should we do?
It may seem heartless to pass over a drug which could ‘only’ save a few thousand lives, but even if you can’t put a dollar price on human life there’s still an opportunity cost in other lives which could be saved by using medical resources more effectively. A functioning healthcare market ought to look something like triage; people who gain the most benefit from medical attention will receive prompt and effective service, while some people are unfortunately going to have to be turned away.