Medicare Is Not Taxing or Coercing Merck, Just Reducing Its Government Subsidies

Michael F. CannonPharmaceutical giant Merck issuing Medicare, claiming new drug ‐​pricing reforms that Congress enacted in last year’sInflation Reduction Act coerce the company into selling its wares to the program at below ‐​market prices. In theWall Street Journal,attorney Daniel Troyopines that the new rules violate the First and Fifth Amendments. Big, if true.What ’s really happening here is that Merck is making tons of money off the taxpayers and wants to keep the gravy train rolling. So the company is offering whatever bad arguments it can to prevent any reductions in its Medicare subsidies.First, a  few preliminaries.The price Medicare should pay forall medical goods and services is $0.00. Anything that moves the actual price in that direction is a  good thing. Some argue that is a recipe for failing to hit the market price. But that gets it exactly backward. Pushing the Medicare price toward $0.00 is theonly way to get market prices.Medicare ’s administrative prices are government price‐​setting. But they are not coercive price controls. Providers are always free to walk away.Every single time providers —and especially pharmaceutical companies—complain about Medicare “price controls,” it is meritless rent‐​seeking. Because they amount they should be getting from Medicare is $0.00.Merck argues, to the contrary, that it is not free to walk away. It claims Congress is forcing the company to sell to Medicare at a  price to which the compa...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs