Trump’s Drug Price Control Orders Are Bound to Backfire
At a White House gathering last Friday, President Trump announced four new executive orders intended to restrict the ways pharmaceutical companies set the price of prescription drugs. He signed and issued three that day and promised to issue a fourth if drug industry representatives don’t agree to massive price controls at a meeting tomorrow.
Seemingly oblivious to the fact that just eight days earlier he staged a highly publicized press conference to explain how regulation often does more harm than good and portray himself as a slasher of federal red tape, Trump boasted Friday about adding to that burden. But, just as the president often warns, those new rules are likely to backfire. They may produce modestly lower prices for some patients in the short term, but everyone will bear the burden of higher prices and fewer treatment options in the long run.
He adopts Biden-like controls that would harm U.S. innovation.
President Trump’s decline in the polls is getting more expensive by the day. The next virus spending bill will cost trillions, and late Friday the President made a pitch for seniors with haphazard executive orders to lower drug prices. His prescription is akin to what Democrats are offering: more government control.
“I’m unrigging the system that is many decades old. We’re doing something that should have been done a long time ago,” the President said at a press conference. “Previous administrations did nothing—absolutely nothing—as drug lobbyists, special interests, and foreign countries freely ripped off our citizens.” Did Bernie Sanders ghost write his remarks? …
Mr. Trump’s drug-pricing orders are a me-too Democratic plan.
Here’s How Trump Should Address the High Cost of Prescription Drugs
… If President Trump wants to bring down drug prices, he should avoid new layers of regulations and controls that will only make matters worse, and focus on bringing consumer-driven market forces and competition to this broken system. … Here’s a solution: stop focusing on trying to control drug prices, and start paying attention to who’s paying them. Tax and regulatory policy, such as the exemption for employer?provided insurance or mandated?benefits laws, have led to a third party—often the government—paying the vast majority of medical bills. With the consumer out of the loop, costs to the third party — and consequently premiums — continue to rise.
Sally Pipes: Trump’s drug pricing executive orders harmful to patients — will hinder development of new drugs
The coronavirus pandemic has demonstrated we need more medical innovation
The International Pricing Index is the worst offender in the three executive orders. The index links the prices the U.S. government pays for prescription drugs to the lower prices Britain, France, Canada and other developed nations pay for the same drugs.
Governments in these countries forcibly cap drug prices. By tying U.S. drug prices to those overseas, President Trump is effectively importing other countries’ price controls. Those price controls will deprive pharmaceutical researchers of the revenue needed to fund cutting-edge development of new drugs that could improve and in some cases save the lives of millions of patients. …
For drug companies and their backers to continue funding research and development, they need some level of assurance that their high-risk investments could pay off.
President Trump’s executive orders render such assurance impossible. Price controls could reduce drug companies’ revenue by as much as $1 trillion over a decade. As a result, up to 15 fewer new drugs could make it to market over that period, according to an analysis from the Congressional Budget Office.
Regulation reform could jump-start Kansas economy after COVID
By Michael Austin.
The COVID-19 outbreak has not only posed a severe public health risk, but actions to combat it now risk a global economic collapse. With nearly half of all Kansas hourly jobs gone, the Kansas Department of Labor is overwhelmed processing unemployment claims. Roughly 40 percent of Kansas small businesses are shuttered, with more than half of them saying they are weeks away from closing permanently.
Kansans need a pathway through this economic disaster. Will we come back stronger than ever before, or fall deep into an economic depression? To paraphrase our state maxim, we can reach for the stars and find better days ahead if we follow the common-sense path.
First, Kansas needs occupational licensing reform, with the most excellent examples of success from Gov. Laura Kelly herself. In March, Kelly waived some licensure requirements, making it easier for physicians to work in Kansas. This fantastic move needs expansion, not a reversal once the virus passes.
From nurses to HVAC technicians, all licensed professionals should be able to work as soon as they cross the border. Good licensing reform protects the public, encourages movement into Kansas, and provides Kansas young adults with a flexible career path.
Kansas needs regulatory reform. Due to the statewide stay-at-home order and voluntary action, countless Kansas businesses shut their doors to “flatten the curve.” Pulling back regulations can prime them to reopen them quickly.
The Kansas Department of Commerce could create a one-stop-shop for all state applications and fees. KDHE and local agencies can fast track the reopening of restaurants with a history of reliable inspections. It takes four and a half weeks to read Kansas state regulations one time (assuming reading 40 hours a week). Allowing businesses to open doors quickly, when public safety allows, gives Kansans precisely what they need to get back to work.
Our leaders must also realize that we need a financially solvent government that encourages the Kansas spirit more than ever. That’s not an invitation for more stimulus, and issuing more debt to Kansans. Such methods didn’t work in 1932 and 2008, and it won’t work today. Kansas policymakers should work to simultaneously grow the rainy day fund while lowering the tax burden on Kansans. That means enforcing performance-based budgeting, matching tax dollars to specific improvements in Kansans’ lives. It also means passing the tax windfall, which rewards Kansas for their donations and gifts during the public health crisis. Finally, restore honesty in property taxation, so Kansans don’t lose their homes when times already are trying.
The COVID-19 outbreak is not a crisis to be seized upon. Any Kansans policy must focus on “flattening the curve” today. Tomorrow, however, we’ll need different guidelines to jump-start the recovery.
Kansas — and America — will recover. The next decade can be better than the last if we give families and businesses the flexibility to grow stronger. Whether the difficulties last for six weeks or six months, our nation’s founders gave us the blueprint to make striving for the stars possible.
Michael Austin is director of the Sandlian Center for Entrepreneurial Government at the Kansas Policy Institute.
Dr. Theodore Bolema is founding director of the Institute for the Study of Economic Growth at Wichita State University and member of the Department of Economics at Wichita State University. On November 8, 2019 he spoke at the Wichita Pachyderm Club on the topics of net neutrality and regulation of the internet. View below, or click here to view at YouTube. Video production by Paul Soutar.
We should be wary of government planning in general. But when those who have been managing and planning the foundering Wichita-area economy want to step up their management of resources, we risk compounding our problems.
As announced by the City of Wichita, “In response to recent recommendations from Project Wichita and the Century II Citizens Advisory Committee, community organizations and their leadership are stepping forward to take the next step to create a comprehensive master plan and vision that connects projects and both banks of the Arkansas River.”
The city says these organizations will be involved:
We should note that these organizations have been responsible for developing the Wichita-area economy for many years. Despite recent developments like Cargill and Spirit Aerosystems, the Wichita economy has performed below the nation. While improving, our economic growth is perhaps half the national rate, and just two years ago Wichita lost jobs and population, and economic output fell.
Thus, the question is this: Why these organizations?
Then, recent behavior by the city, specifically surrounding the new ballpark, has resulted in a loss of credibility. Few seem happy with the city’s conduct. To this day, we still do not know the identities of the partners except for one.
In the future, can we trust the city and its partners are telling us the truth, and the whole truth?
Planning seems like a good thing. But O’Toole tells us the problem with government plans: “Everybody plans. But private plans are flexible, and we happily change them when new information arises. In contrast, special interest groups ensure that the government plans benefiting them do not change — no matter how costly.”
He continues: “Like any other organization, government agencies need to plan their budgets and short-term projects. But they fail when they write comprehensive plans (which try to account for all side effects), long-range plans (two to 50 years or more), or plans that attempt to control other people’s land and resources. Many plans try to do all three.”
Other problems with government planning as identified by O’Toole (and many others):
Planners have no better insight into the future than anyone else
Planners will not pay the costs they impose on other people
Unlike planners, markets can cope with complexity
Some will argue that the organizations listed above are not government entities and shouldn’t exhibit the problems inherent with government planning. But their plans will undoubtedly need to be approved by, and enforced by, government.
Further, some of these organizations are funded substantially or nearly entirely by government, are in favor of more government (such as higher taxation and regulation), and campaign vigorously for candidates who support more taxes and planning.
Following, from Randal O’Toole as published in 2007.
Government Plans Don’t Work
By Randal O’Toole
Unlike planners, markets can cope with complexity and change.
After more than 30 years of reviewing government plans, including forest plans, park plans, watershed plans, wildlife plans, energy plans, urban plans, and transportation plans, I’ve concluded that government planning almost always does more harm than good.
Most government plans are so full of fabrications and unsupportable assumptions that they aren’t worth the paper they are printed on, much less the millions of dollars taxpayers spend to have them written. Federal, state, and local governments should repeal planning laws and shut down planning offices.
Everybody plans. But private plans are flexible, and we happily change them when new information arises. In contrast, special interest groups ensure that the government plans benefiting them do not change — no matter how costly.
Like any other organization, government agencies need to plan their budgets and short-term projects. But they fail when they write comprehensive plans (which try to account for all side effects), long-range plans (two to 50 years or more), or plans that attempt to control other people’s land and resources. Many plans try to do all three.
Comprehensive plans fail because forests, watersheds, and cities are simply too complicated for anyone to understand. Chaos science reveals that very tiny differences in initial conditions can lead to huge differences in outcomes — that’s why megaprojects such as Boston’s Big Dig go so far over budget.
Long-range plans fail because planners have no better insight into the future than anyone else, so their plans will be as wrong as their predictions are.
Planning of other people’s land and resources fails because planners will not pay the costs they impose on other people, so they have no incentive to find the best answers.
Most of the nation’s 32,000 professional planners graduated from schools that are closely affiliated with colleges of architecture, giving them an undue faith in design. This means many plans put enormous efforts into trying to control urban design while they neglect other tools that could solve social problems at a much lower cost.
For example, planners propose to reduce automotive air pollution by increasing population densities to reduce driving. Yet the nation’s densest urban area, Los Angeles, which is seven times as dense as the least dense areas, has only 8 percent less commuting by auto. In contrast, technological improvements over the past 40 years, which planners often ignore, have reduced the pollution caused by some cars by 99 percent.
Some of the worst plans today are so-called growth-management plans prepared by states and metropolitan areas. They try to control who gets to develop their land and exactly what those developments should look like, including their population densities and mixtures of residential, retail, commercial, and other uses. “The most effective plans are drawn with such precision that only the architectural detail is left to future designers,” says a popular planning book.
About a dozen states require or encourage urban areas to write such plans. Those states have some of the nation’s least affordable housing, while most states and regions that haven’t written such plans mostly have very affordable housing. The reason is simple: planning limits the supply of new housing, which drives up the price of all housing and leads to housing bubbles.
In states with growth-management laws, median housing prices in 2006 were typically 4 to 8 times median family incomes. In most states without such laws, median home prices are only 2 to 3 times median family incomes.
Few people realize that the recent housing bubble, which affected mainly regions with growth-management planning, was caused by planners trying to socially engineer cities. Yet it has done little to protect open space, reduce driving, or do any of the other things promised.
Politicians use government planning to allocate scarce resources on a large scale. Instead, they should make sure that markets — based on prices, incentives, and property rights — work.
Private ownership of wildlife could save endangered species such as the black-footed ferret, North America’s most-endangered mammal. Variably priced toll roads have helped reduce congestion. Pollution markets do far more to clean the air than exhortations to drive less. Giving people freedom to use their property, and ensuring only that their use does not harm others, will keep housing affordable.
Unlike planners, markets can cope with complexity. Futures markets cushion the results of unexpected changes. Markets do not preclude government ownership, but the best-managed government programs are funded out of user fees that effectively make government managers act like private owners. Rather than passing the buck by turning sticky problems over to government planners, policymakers should make sure markets give people what they want.
In this episode of WichitaLiberty.TV: Author Lenore Skenazy talks about today’s children and the free-range kids movement. View below, or click here to view at YouTube. Episode 212, broadcast October 7, 2018.
In this episode of WichitaLiberty.TV: United States Representative Ron Estes discusses trade, FAA reauthorization and his amendment, entitlement reform, and spending. View below, or click here to view at YouTube. Episode 195, broadcast May 5, 2018.
In this episode of WichitaLiberty.TV: Dr. Tom G. Palmer of Atlas Network joins Bob Weeks to explain why the usual approach to foreign aid isn’t working, and what Atlas Network is doing to change the lives of the poor across the world. View below, or click here to view at YouTube. Episode 189, broadcast March 24, 2018.
In today’s Wichita Eagle Chase Billingham has an excellent column explaining the recent changes to panhandling laws in the City of Wichita (Chase Billingham: New laws will criminalize homeless). An assistant professor of sociology at Wichita State University, he makes important observations and warnings about the effect of these laws.
In his column, Billingham notes a problem with the ordinance designed to regulate “aggressive” panhandling: “Importantly, though, the ordinance defines ‘contact’ in an extremely vague manner.” I may have noticed the same problem in this example from Ordinance No. 50-643:
Section 2: “Contact” means the intentional action by any person which attempts to attract the attention of any other person for the purpose of inducing such other person to slow, stop or which obstructs or hinders the movement of such other person to facilitate a transfer of anything to or from either person.
Street theater in New Orleans. Would this be legal in Wichita? Click for larger.What is an example of attracting someone’s attention to induce them to slow or stop? Busking. And it’s designed to encourage — “facilitate” — the transfer of money to the busker.
In the ordinance, the city says its purpose is to “regulate behaviors that are intimidating, threatening or harassing.” At the same time, the city takes actions that work in cross-purposes. In particular, the city has taken steps to allow — if not to encourage — more alcohol consumption. In 2016 laws were changed that both restricted and liberalized alcohol consumption. This year the city lobbied the state for laws that would establish “common consumption areas.” These are geographically-defined areas where free-range drinking is allowed. That is, you can drink outside in public, like on Bourbon Street in New Orleans. Besides Old Town, the city mentioned Delano and College Hill as possible common consumption areas.
There is a reason why cities have long outlawed drinking on the streets and sidewalks. But I guess that no longer applies.
I wonder if the city is running the risk of creating a Disneyland downtown, where everything is planned, staged, and regulated. Our city planners set design standards for buildings, and then use the lure of our tax money to encourage compliance. Is there a purportedly problematic public park interfering with you plans for development? No problem. Just ask the city to redirect your tax dollars away from police and schools so that the park can be rebuilt at no cost to you — in a Disneyland style. Too much crime on the streets? The city will install expensive and obtrusive surveillance systems to protect you, and also to harvest revenue if you forget to activate your turn signal in time.
Vibrant urban areas need organic, grass-roots use of public spaces. It’s a big part of what makes a city a city and not a carefully manicured suburb. It’s knowing that the unexpected could be around any corner and fully embracing that possibility.
Funny thing is, the entities that are pushing for this crackdown on panhandling know this. Visit Indy, Indianapolis Downtown Inc. and Ballard’s administration called for the promotion of organic urban experiences in the Velocity Action Plan released earlier this month.
They want a freer, livelier atmosphere Downtown. They want “guerrilla-style” takeovers of public spaces. They want visitors and residents to be surprised by randomness. In short, they want a true urban environment.
But here’s the inconvenient truth: To get that kind of organic, vibrant urban atmosphere, you cannot control everything. And part of not being able to control everything is that, to a certain extent, you have to accept the good with the bad. The pretty with the ugly.
The mime outside Bankers Life Fieldhouse and the man sitting quietly with a sign asking for money. The woman sprawled on the sidewalk with a cup and the saxophone-playing busker who sends people to the Chatterbox club to hear more jazz.
This is the messiness of an urban environment. It’s not always pretty. But it’s not supposed to be. The people who live Downtown know this. We understand it. It’s why we moved here and not to Carmel.
