16.8.09

WAL-MART IS TO VLASIC AS CONCARE IS TO? Robert Reich:
Being the one public plan, it will have large economies of scale that will enable it to negotiate more favorable terms with pharmaceutical companies and other providers. ... But this won't lead to a government takeover of health care. The whole point of cost containment is to provide the public with health care on more favorable terms. If the public plan negotiates better terms—thereby demonstrating that drug companies and other providers can meet them—private plans can seek similar deals.
Where shall we begin? If Wal-Mart negotiates better terms, Dayton-Hudson can seek similar deals. Or has Wal-Mart solicited a discriminatory price cut that leads to a substantial lessening of competition or a tendency to create monopoly? Does the argument generalize? Or, will cost containment mean lower prices for current pharmaceuticals at the expense of future development?

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