Thursday, March 25, 2004
Minnesota Governor needs a lesson in economics
["Minnesota Gov. Fights Drug Companies," Fox News, 24 March 2004.]
Minnesota Republican Gov. Tim Pawlenty hopes to use his state's pension system to take on U.S.-based Pfizer, the world's largest drug company.
Pfizer charges less for its medicines in Canada and other countries than it does in the United States. Pawlenty says that's wrong.
"There's a difference between innovation and being a chump and we're being played," Pawlenty said.
The problem with this line of reasoning is that it ignores basic facts about the differences between the economies of Canada and the U.S. Even if all price control mechanisms were removed in Canada, residents there would likely still pay less for drugs than they do in the U.S. This is the same thing that occurs with just about any consumer good. The fact is, the Canadian economy is weaker and Canadians generally earn less than Americans (in part due to interventionist policies). Insisting on the same price for drugs in both countries would either A) price many Canadians out of the market, or B) have a tremendous detrimental impact on U.S. drug manufacturers, since the U.S. is where most drugs are sold. The other option, of course, is to try to reduce the standard of living in the U.S. That's perhaps a less politically marketable solution, though.
["Minnesota Gov. Fights Drug Companies," Fox News, 24 March 2004.]
Minnesota Republican Gov. Tim Pawlenty hopes to use his state's pension system to take on U.S.-based Pfizer, the world's largest drug company.
Pfizer charges less for its medicines in Canada and other countries than it does in the United States. Pawlenty says that's wrong.
"There's a difference between innovation and being a chump and we're being played," Pawlenty said.
The problem with this line of reasoning is that it ignores basic facts about the differences between the economies of Canada and the U.S. Even if all price control mechanisms were removed in Canada, residents there would likely still pay less for drugs than they do in the U.S. This is the same thing that occurs with just about any consumer good. The fact is, the Canadian economy is weaker and Canadians generally earn less than Americans (in part due to interventionist policies). Insisting on the same price for drugs in both countries would either A) price many Canadians out of the market, or B) have a tremendous detrimental impact on U.S. drug manufacturers, since the U.S. is where most drugs are sold. The other option, of course, is to try to reduce the standard of living in the U.S. That's perhaps a less politically marketable solution, though.
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