I see a difference between helping folks become what they want as opposed to trying to make folks into something we want...

Thrashing the Turkish, Iranian, and/or Syrian Armed Forces is what our Armed Forces are good at...

Lou about to blow a gasket on every topic on tonights show... you wouldn't want to miss it!

He's a top pundit, just ask Forbes. If he has a stroke on air it would REALLY be good for ratings.

I've already added Fox Business News channel to my favorite channel list even though it doesn't start up til Monday. Not that Lou actually covers business anymore...

Did he ever? Any major economists ever promote protectionism?

When Lou did business news I don't remember him acting like he does now...

As far as economists, more than a few seem to hide behind the fair trade arguments that will effectively end free trade...

Yeah...

Protectionism is retarded, however, the WTO and NAFTA aren't really Free Trade - they are forms of managed trade. For example, the World Bank and United Nations mediate NAFTA Chapter 11 issues. This is a clear subversion of national sovereignty.

http://www.citizen.org/trade/nafta/CH__11/

snip:

If they're secret tribunals how do you know about them?

For example, NAFTA's Chapter 11 provision states transnational corporations can sue the federal, state and local government(s), in order to challenge US laws. This is done so transnational corporations can recover potential losses or actual losses caused by these laws. To add insult to injury, only the State Department, DOJ and the Office of the United States Trade Representative can defend the law. State and local governments have no representation in any type of 'NAFTA tribunal', which is facilitated through the World Bank. In closing, this is an insane bureaucracy, which is an insult to everything American.

Robert Azinian and others v. United Mexican States

Waste Management, Inc. v. United Mexican States

These are summations of NAFTA Chapter 11 tribunals on the WORLD BANK'S website. They hear these cases.

So not so secret tribunals then...

... and of course there is this...



Now don't get me wrong, any bureaucracy, whether State, Federal, or International is largely unneeded however at least this one the parties can exit fairly easily. If the rest of the nations say sign an agreement like this or not trade then that sort of leaves us in a bind then doesn't it? We can't make them play with us...

Good points...

My point is that we don't need foreign bureaucrats dictating trade policy for Americans, Mexicans, Canadians, or any other group of people.

True enough but is that what is going one here?

Say you, Space, and I wanted to go into a joint venture. As part of the agreement the three of us would sign we might include both how each of us would exit the agreement and also some sort of disagreement resolution system. Since we live three in the US but in different states we might limit remedies to Federal Court or perhaps even a private mediation. So if three partners enter into an international agreement they would do the same thing. The tribunal is the alternative to relying on an individual nations legal system.

Now with NAFTA it may be the case that the US administration did not negotiate a very good deal for the US. Keep in mind however that it wasn't all beauty and light before NAFTA. There were many trade barriers set up between the three countries and while we might have simply wanted to drop those barriers I suspect the others did not want to be overwhelmed by US economy and thus was born NAFTA. We could refuse to enter into these trade agreement but I think we would be at some risk of being shut out of the international markets. I don't think that would be good. We might certainly do a better job of negotiating the agreements (not the usual fair trade arguments for me thanks) but I suspect the other partners already think we got the better of the deal...

Nobel Committee... Al Gore... Climate Change... Peace?

Peace is not absence of war but absence of climate change...

Good News



Bad News

Paul Krugman Gem



National Gubment Radio

Welcome news for SE US...



Cannot wait for the local eco terrorists to go ballistic at the thought of a wind farm offshore off our little island...

Related link... SE US could use a boost...

Wind Projects Map

Could be a win win situation here... Incirlik Air Base may be inside Krudistan...

If we entered into voluntary contracts, the court system would be there to enforce those contracts. There is no need to cede sovereignty to some international body.



NAFTA is not an agreement, it is a set of laws. NAFTA, if you study the data, has not benefited Americans, Canadians, or Mexicans - only a few benefit through this managed trade deal. We don't need the World Bank and the UN arbitrating trade disputes. It falls under the respective jurisdiction of the countries involved. NAFTA, GATT, CAFTA, the WTO, and the UN are just one step closer to regionalization and global government.

... and so what Court System is there to enforce multi county agreements? The one the three COuntries in question agreed upon... the NAFTA tribunal... just as you, Space, and I might agree not to use State courts since we live in different States or even Federal Courts but a private arbitration process to resolve disputes...

... I don't see how NAFTA is a "law" since any member nation can opt out at any time...

That sounds like a big wind farm. I hope the citizens win rather than the eco-groups.

Maybe LP will be able to see it from his oceanside mansion...

If I had an extra $60K laying around I would pay for a weather station here, not too far up the road from the NMB station...

Space, did you notice that TX was leading the way in wind energy power production on that linked diagram? Windy in West Texas...

I knew we had that big farm out west, but I didn't know that made us the leader.

Kewl.

I wonder how they keep the tumbleweeds from gumming up the works? Some sort of cow catcherish device?

Clearance to the ground, I imagine.

I don't know in West Texas you might save a lot of the tower cost, just get the tips to brush the dirt...

US Treasury Social Security Report Part 2

Some pretty good info that still leads me to the conclusion that COngress will not do anything anytime soon..,

A couple of things today...

If North America has significant fossil fuel reserves, though some expensive to get to like shale oil, and fossil fuel is a finite resource and relatively cheap now, a strategy to use up non North American fossil fuel first and save North American reserves for when world price increases significantly might be a proper course...

Perhaps Congressional Ds are also using the Armenian vote (as well as special interest pandering) to create an worsening situation in Iraq to achieve withdrawal of US troops... or at least assure the situation in Iraq is untenable by the time the next president is elected...

I've thought that for a long time, which is why I oppose opening ANWAR for the time being.



Some others have suggested that too.

Congressional Ds releasing report on Medicare Part D consumer costs that concludes that Medicaid does it significantly cheaper than private insurers. What was left out was an analysis of the scope of drug formularies of private insurers versus Medicaid...

http://www.nationalcenter.org/NPA550MedicareDrugPrices.html

Letting Medicare "Negotiate" Drug Prices: Myths vs. Reality


by David Hogberg, Ph.D.



The opening of the 110th Congress will witness the return of the debate over Medicare and prescription drugs.

In 2003, Congress and President Bush enacted the "Medicare Prescription Drug, Improvement and Modernization Act," which established a prescription drug program for Medicare. That legislation expressly prohibited Medicare from negotiating drug prices with pharmaceutical companies. Rather, any negotiation that takes place is to be between pharmaceutical companies and the insurance companies that administer the Medicare prescription drug program.

Congressional Democrats have made it clear that they want to eliminate that prohibition. As the official website of the Democrats in the House of Representatives put it, "Medicare must have the authority to negotiate with drug companies for lower drug prices."1 Now that the Democrats control Congress, they are expected to eliminate the prohibition. Speaker-elect Nancy Pelosi has promised that the Democrats in the House will move various pieces of legislation in the first 100 hours of the 110th Congress, one of which will be aimed at "fixing the Medicare prescription drug program [and] putting seniors first by negotiating lower drug prices."2

Unfortunately, a host of myths - if not outright falsehoods - comprise the intellectual ammunition for the push to let Medicare negotiate drug prices. The political left is misleading the American public by portraying these as established facts.

Examining these myths in detail yields the truth: Letting Medicare negotiate drug prices means putting price controls on prescription drugs. It also would mean higher health insurance costs for the private sector, less pharmaceutical research and development, fewer new drugs and lower quality of life for Americans.

* * *

Myth: Medicare will "negotiate" drug prices.

Reality: Medicare will put price controls on drugs.

Merriam-Webster defines "negotiate" as "to confer with another so as to arrive at the settlement of some matter."3 Using the word negotiate obscures the truth about the way Medicare works. Medicare does not confer with medical providers about prices. Rather, it sets prices. If providers don't accept these prices, then they will not be reimbursed for treating Medicare patients.

That is exactly how Medicare functions in the area where it pays for drugs directly. Medicare Part B - which covers outpatient services - pays for prescription drugs that are not usually self-administered, such as a tetanus shot.4 Medicare does not bargain with the sellers of these drugs to arrive at the price it will pay. Rather, Medicare bases its payment on the average price of the drug in the private sector. Specifically, as the U.S. Department of Health and Human Services has described the process, "the Medicare reimbursement amount for a covered drug is 95 percent of the drug's average wholesale price (AWP). Of this amount, Medicare pays 80 percent while the beneficiary is responsible for a 20 percent co-payment."5

The term for this is not "negotiation." It is "price control." If that's what the proponents of this Medicare "reform" want, then they should be open and honest about it.

Myth: Letting Medicare set drugs prices will keep drug prices down.

Reality: Letting Medicare set drug prices will increase drug prices and, hence, health insurance costs for the private sector.

Typical of the myopic view of the effect of letting Medicare set drug prices is an analysis by Dean Baker of the left-of-center Center for Economic and Policy Research. Baker claims that Medicare "negotiations should in principle allow for very substantial reductions in price, because the pharmaceutical industry sells prescription drugs for prices that are typically more than 200 percent above their cost of production."6 But as the great French economist Frederic Bastiat pointed out:

In the economic sphere an act, a habit, an institution, a law produces not only one effect, but also a series of effects. Of these effects, the first alone is immediate; it appears simultaneously with its cause; it is seen. The other effects emerge only subsequently; they are not seen; we are fortunate if we foresee them.7

The reduction in drug prices for Medicare will be the "seen" effect. The subsequent rise is drug prices in the private sector, however, will be the "unseen" effect. Drug prices will rise in the private sector because drug companies will want to maximize the price they receive from Medicare. The price Medicare will pay will be based on the average price in the private sector. So, the higher prices are in the private sector, the greater the average price will be. The higher the average price, the greater the reimbursement the pharmaceutical company will receive from Medicare.

This phenomenon has already played itself out in Medicaid, the government health insurance program for the poor. Medicaid, like Medicare Part B, bases the price it pays for drugs on the average private-sector price. According to Professors Mark Duggan and Fiona M. Scott Morton, "When Medicaid is a large part of the demand for a drug, this creates an incentive for its maker to increase prices for other health care consumers." Duggan and Morton's "estimates imply that a 10-percentage point increase in the [Medicaid market-share of a prescription drug] is associated with a 7 to 10 percent increase in the average price of a prescription."8

In 2004, those most likely to be eligible for Medicaid accounted for about 11 percent of all drug purchases over $300. Those eligible for Medicare accounted for about 30 percent.9 Letting Medicare put price controls on drugs would, therefore, have an even bigger effect of increasing the price of drugs in the private sector than does Medicaid. With rising drug prices in the private sector, health insurance companies that cover prescription drugs will have little choice but raise the price they charge for premiums. The increase in the price of health insurance is likely to result in some companies cutting back on, or canceling entirely, employees' health insurance coverage.

Myth: Europe and Canada impose price controls and other restrictions on drug use, and those systems work.

Reality: Europe's and Canada's systems delay access to innovative drugs, which results in otherwise preventable deaths.

According to a report prepared by House Democrats:

The United States is unique among industrialized countries because it is the only country that fails to protect its citizens from discriminatory pricing of prescription drugs. Canada, France, Italy, Germany, Japan, and the United Kingdom all negotiate on behalf of their citizens to obtain lower prices for brand name drugs. As a result, purchasers in these countries pay significantly less for prescription drugs than uninsured senior citizens in the United States.10

Organization of Economic Development (OECD) member countries, excluding the United States, use a mix of price controls and volume controls (limits on how much of a drug can be sold) to keep downward pressure on the price of prescription drugs. However, these restrictions come with a high cost.

As one study explained, "Patients in OECD countries typically gain access to innovative medicines - if at all - only after a substantial delay and at a level of availability usually well below that enjoyed by U.S. patients."11 The study measured the lag between the U.S. launch of a new drug and the OECD launch. The average lags for various drugs ranged from six months for a cancer drug up to 24 months for an anti-depressant. Because of volume controls, the rate of utilization of innovative drugs is much lower in OECD countries, averaging about 50 percent of U.S. levels three years after the launch of the drug.

Due to price controls and other regulation, a Lewin Group study found that statins, a class of drugs for those with high cholesterol, were slow to be utilized in Europe in the 1990s.12 The study estimated that over a five-year period, this led to 28,000 preventable deaths in Germany, 26,000 in Italy, and 19,000 in the United Kingdom.

The proper conclusion to draw from Europe's experience is that permitting Medicare to control the price of drugs will ultimately be hazardous to Americans' health.

Myth: Medicare should adopt a "formulary," since formularies have saved money on drugs in Medicaid, the Veteran's Administration and the private sector.

Reality: While formularies may save money on drugs, the savings are offset by higher spending in other areas of the health care system, such as doctors' visits and hospitalization.

A formulary, also known as a preferred-drug list, is a list of approved drugs that an insurance program will pay for. If a drug is not on the list, then the insurance program will either refuse to pay for it or the patient will have to go through a special approval process to get the program to pay for it.

Jonathan Cohn of The New Republic recently advocated that Medicare "create a formulary system, with lists of drugs for which it would either pay in full, pay in part, or not pay at all - and base inclusion on price or quality or, ideally, both." He dismissed any concerns with using formularies:

Drug-makers also caution that, if the government adopts formularies, they would block access to necessary drugs for severely ill patients. But private insurers - including the ones now serving Medicare beneficiaries - use formularies, too. And studies of the [Veterans Administration] formulary by both the Government Accountability Office and the Institute of Medicine found no evidence of access problems.13

Actually, the GAO report did note some problems with VA's formulary. It stated that two of the facilities it reviewed had yet to include about 140 drugs that were on the VA's formulary. Furthermore, "the approval process for the use of nonformulary drugs across VA's health care system does not ensure that all facilities have an efficient and timely process." There was "wide variability in how requests are made, who approves such requests, and how much time it takes."14

Other research shows that the VA's formulary may even have deadly consequences. Economist Frank Lichtenberg examined the VA's practice of using its formulary to discourage the use of newer drugs, and concluded that it may lower the average age at death among VA patients by about two months.15

Studies of other drug formularies have found that costs savings are illusory. Patients have different reactions to different drugs, and generic drugs (which are usually preferred by formularies because they are cheaper) do not always work as well as brand-name ones. One study of HMOs found that the more restrictive the formulary, the higher the rate of patient office visits, emergency room visits and hospitalization, while a study of Medicaid formularies concluded, "Savings in the drug budget appear to be completely offset by increased expenditures elsewhere in the system."16 The lesson is clear: impose a formulary on Medicare patients and Medicare will see increased costs for doctors' visits and hospitalization.17

Myth: Medicare price controls will have no effect on pharmaceutical industry research and development, especially as most drug research is conducted by the National Institute of Health.

Reality: The National Institute of Health plays an important but limited role in drug research. Furthermore, price controls in OECD countries have already caused a decline in pharmaceutical industry research and development and, thus, the development of new drugs.

Jonathan Cohn provides a typical disparagement of the importance of pharmaceutical industry research and design (R&D):

...the most important basic medical and scientific research that leads to major medical breakthroughs usually takes place under government auspices - typically, through grants from the National Institutes of Health. In other words, taxpayers - not drug companies - are the ones financing the most important drug research today. So, even if the pharmaceutical industry did reduce its research and development investment because of declining revenues, what we'd lose probably wouldn't be the next cure for cancer - it would be the next treatment for seasonal allergies, and likely no better than the ones we have already.18

A systematic study conducted by the National Institute of Health (NIH) suggests that the NIH's role is not as large as Cohn suggests it is. The NIH funds a lot of "basic research," and the study noted, "technologies developed in basic research laboratories are nascent, requiring extensive further development."19 It is the pharmaceutical companies that fund that further development. The study also examined pharmaceuticals that had at least $500 million in sales in the U.S. Of the 47 drugs that met that standard, the NIH determined that it had involvement in only four of them. The other 43 included drugs for bacterial infections, diabetes, hypertension, high cholesterol and Hepatitis C - hardly mere "treatments for seasonal allergies."

A bevy of research shows that price controls in OECD countries have diminished drug R&D by private companies and, as a result, the number of new drugs available to patients:

* A U.S. Department of Commerce study estimates that OECD price controls reduced annual R&D by $5 billion to $8 billion. Were R&D to increase by $5 billion to $8 billion, three to four new drugs would be being developed each year.20

* The Boston Consulting Group estimated even larger effects: "OECD government interventions are effectively discouraging the incremental investment of $17-22 billion in annual global biopharmaceutical R&D." This loss of R&D results in the loss of "10-13 additional drug launches" annually. Furthermore, it is not just Europe that suffers: "The U.S. consumer and economy bear their share of the consequences, in the form of fewer innovative medicines, fewer drugs competing in any given category to drive prices lower, fewer jobs and a slower growth trajectory for one of the preeminent U.S. industries."21

* University of Connecticut economist John A. Vernon found a negative relationship between price controls in OECD countries and drug R&D. Extending this to the U.S., he finds that similar regulations here would reduce R&D by 36-47 percent.22 With colleagues Rexford E. Santerre and Carmelo Giacotto, Vernon projects the effects of Medicare price controls. Using an infinite time horizon, they conclude that the present value of lost R&D is $508 billion resulting in 277 million lost "life years" in the general population.23

* Benjamin Zycher of the Manhattan Institute also examined the future effect of permitting Medicare to impose price controls on prescription drugs. He concluded that R&D would decline by $10 billion annually, resulting in the loss of six to twelve new drugs every year. This "would yield a lost of 5 million expected life-years annually, an adverse effect that can be valued conservatively at about $500 billion per year, an amount in excess of total annual U.S. spending on pharmaceuticals."24


Conclusion

Letting Medicare set drug prices has only one short-term benefit: Lowering drug prices for seniors on Medicare right now. It also has many harmful consequences. These include higher drug prices in the private sector, higher health insurance prices in the private sector, a reduction in research and development of new drugs, fewer new drugs and shorter life-spans.

For the sake of Americans' health, as well as the pocketbooks of many, Congress should keep Medicare out of the drug pricing business.

That's what was so amusing about the debate earlier this year on Medicare Drug Negotiation Bill... They specifically ruled out removing drugs from the formulary and didn't try to revoke drug patents so if the CMS folks follow the bill they would have zero leverage with the drug suppliers. I am sure every House member who voted for it felt much better though and will include it in their accomplishments for the year... It didn't actually became law after passing House it was killed in the Senate...

Much ado about nothing in the end.

That pretty much sums up this year in the Federal gubment and that ain't bad...

You are probably forgetting Bushie's recent admonishment of the Democratic Congress for not passing the budget on time....

Now that was big news.

Space, you must have been... out in Space... where budget work is completed on time... of course, no appropriations are better than any appropriations... but that's just me...

I thought it was hugely funny for Bushie to complain since the last Republican congress actually just gave up entirely on their last budget and left the task to the next congress.

It's a real bummer that once your in the majority, your actions actually show your true intentions. Rs talk about reducing the size of gubment and fiscal responsibility was just that, talk. Of course the R Presidential candidates are trotting out the old chestnuts, and except for Dr. Paul, not one of them ever intends to follow through if elected. At least Ds will mostly say they are proposing increased gubment scope, spending, and taxes and fully intend to follow through if elected... Now they do say the new gubment programs for you will be paid for by someone else... and they fully intend to follow through on that too... Ideally never vote for a candidate that really wants the office... chances are they will do just about anything to keep it... See vast majority of R House members from 1995-2006...

It's because the National Center is a bunch of humanitarians.



http://www.nationalcenter.org/NCPPRHist.html

Question the messenger when the message cannot be questioned?

How would Medicare get drug companies to lower their prices if they cannot remove the drug from the formulary or revoke their patent?

My Congressman... folding like a cheap card table...



Gonna Get 90% of Vote in 2008 & Still Folds

For you instant runoff ballot fans...



IRB News

Fortunate we have as despised a group as the hold out smokers whom some can tax to fund their favorite programs.

Fed gubment policy on smoking and taxing smokers certainly reinforces the adage that you should tax what you want to reduce... then there is the income tax...

Folks like my Congressman hiding behind the cigarette tax are just ducking the real issue... what is role of Federal gubment in health care and who should be subsidized?

I heard an analysis of the SCHIP bill last week that in a few years 80% of the kids would no longer be covered as revenue source dries up due to 5 year paygo constraints...

And hiding behind the cigarette tax obscures the issue of who must ultimately pay for expanded federal programs, which is all taxpayers. Have the courage to pursue your convictions honestly farking Democrats!

You can only have the humanitarianism you can afford. Those who complain about somebody else's humanitarian aims usually aren't willing to pay much extra to provide anything themselves. The government solution usually ends up enforced at gunpoint.