Physician, hospital and pharmaceutical markets

Instructions

Your assignment this week will involve some research into the controversial area of pharmaceutical pricing. Leave your politics behind on this assignment – I only want to hear from health economists here. As you have heard in the media and in the lesson this week, pharmaceutical companies have exhibited markups for their products that rival what I did with the $50 aspirin in hospitals back in the 80s. Many politicians and consumer advocates have argued that the Federal government should either regulate pharmaceutical prices or at least negotiate prices for the Medicare Part D program. I want you to examine the idea of negotiating prices for pharmaceuticals under the Medicare Part D program.  Currently Federal law prohibits the Centers for Medicare and Medicaid Services from negotiating with pharmaceutical manufacturers for lower prices. Should that change? Or, is it better left the way things are now?

In an essay of at least seven (7) full paragraphs in length, research this topic and provide your ideas on the following questions:

• One argument in favor of negotiating prices (cite at least two academic sources excluding the text or “wikipedia”);
• One argument opposed to negotiating prices (cite at least two different academic sources from those you used in favor excluding the text or “wikipedia”);
• Project the impact on pharmaceutical companies if prices are negotiated – will fewer new drugs come to market, will research go overseas, or something else?
• Project the impact on markets overall if we retain the status quo with drug pricing.

Again, no politics.  Only economic arguments in your responses. Cite a minimum of four (4) academic sources (industry or research journals – no industry position papers, no “wikipedia” and you cannot use the textbook). If you have any questions about a source, it is okay to ask, but if you have to ask, it probably is not academic