Thursday, December 08, 2005

Immoral Backers of American Drug Companies

Peter Huber in Fortune (Dec 05, 2005 on web; http://www.forbes.com/forbes/2005/1212/113.html?_requestid=3697) makes the case that rich should pay higher prices for the drugs so that cost of drug research is covered. He argues that this is consistent with the Ramsey’s principle of variable pricing. Based on this logic he chides Canada, Veterans Affairs and HMOs for insisting uniform price.

He is completely wrong and does not understand basic logic itself.

He makes the mistake that America as a whole is a rich country so that everyone in America should pay the higher prices. My question is where does he live? On Wall Street or some other exotic rich only people of this world? Does he think everyone in America work for Google or what? I mean on this earth can you say that Americans are rich after watching the Katrina tragedy where Americans realized the true poverty in this country. Well, apparently only the rich, ideologically driven, reality blind pro rich people like Huber only can not see this reality.

If he thinks rich should pay higher for drugs; have American rich to pay higher prices for their Medical costs. Why poor and middle class in America should pay higher prices? It is nothing but robbing poor and middle class in America for the far profits of drug companies. If Huber and likes of him who care so much for market dynamics and worry of vanishing drug companies from America; really want to be consistent and true followers of Ramsey principles; then they need to come up with a model which addresses the income level differentials within America which is reflected appropriately in drug prices. These are the types of people who all the time give reference to Lafer curve, keep on insisting tax cuts and then bemoan for existing prices for poor in America. Unless such a calibrated model is proposed, any such talk is useless. Worse, it is immoral because it is of the type ‘rob poor to give money to rich!’

Peter Huber wake up, smell the cheap coffee and talk something which Main Street can understand.

Umesh Patil
San Jose, CA 95111
December 08, 2005.

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