THEY'LL NEVER LEARN.

Self-styled progressives never cease to amuse.

Sen. Bernie Sanders (I-Vt.), chairman of the Senate Health, Education, Labor, and Pensions Committee, and Sen. Amy Klobuchar (D-Minn.) on [May 4] introduced legislation to cut the price of prescription drugs under Medicare in half by requiring Medicare to pay no more for prescription drugs than the U.S. Department of Veterans Affairs (VA). If this legislation were signed into law, Medicare would save an estimated $835 billion over the next decade.

“There is no rational reason, other than greed, for Medicare to pay twice as much for the same exact prescription drugs as the VA,” Sanders said. “The bill we are introducing today would cut the price of prescription drugs in half under Medicare, save taxpayers $835 billion over the next decade and provide real relief to millions of seniors who cannot afford their prescription drugs. If the VA can negotiate with the pharmaceutical companies to substantially reduce the price of prescription drugs (which it has done for the past 30 years), we can and we must require Medicare to receive the same exact prices that the VA pays for prescription drugs. If Republicans are really serious about reducing the deficit they should support this bill.”

Populist froth. Does anybody really believe that federal expenditures on drugs will be reduced on the order of a trillion dollars over the next ten years simply by expanding a monopsony?

I don't watch the Sunday shows any more, but American Thinker contributor Monica Showalter saw an interesting exchange between regime mouthpiece Margaret Brennan and former drug commissioner Scott Gottlieb.

The reimbursement for these drugs under government programs has been driven down very low. Something above the marginal cost of manufacturing the drugs. And that's fine when it comes to a pill form drug where there's not a lot that can go wrong. But when it comes to an injectable drug, you need to leave a margin in so people can re-invest in manufacturing facilities, make sure they're high quality. They haven't done that and things go wrong and it results in shortages.

It's possible to negotiate a price closer to marginal cost and continue to raise capital for the business, although getting this right in an environment with government, other institutional, and individual buyers without creating cream-skimming opportunities is hard.

The problem the so-called Inflation Reduction Act imposes is that there's less stuff available at the controlled price.  It's tempting to pretend that the prices aren't signals, but signals they are.

Price controls create shortages. It happens every time you try it. I saw it up close in Venezuela in 2005, when the hugely popular Venezuelan Polar brewery pleaded with the Hugo Chávez socialist government to drop its price controls on agricultural ingredients used to make the company's products because the controls had made it utterly impossible for them secure the ingredients or sustain the business at all. It was in a full-page newspaper ad that ran in El Universal. The pleas, of course, went ignored, and today one cannot buy Polar products in Venezuela.

The Venezuelan situation introduces a different error Our Intellectual Betters make.  Pretend that if the government mandates that barley will be cheaper, then beer will be cheaper.  If there's no restriction on the price of beer, the regulation induced shortage of barley turns into reduced beer production and drinkers bid up the price.  I suppose the Chavistas could nationalize Polar as a price gouger, but if they take the brewery over, in Caracas there is still no beer.