Sez Senator Charles Schumer. The pharmaceutical company Merck is facing generic competition for its cholesterol-lowering drug Zocor. In response, Merck is cutting deals with insurance companies to offer lower copays on name-brand Zocor than the generic equivalent (it’s true that a copay is not the actual price of the drug, but it is the price signal that people with insurance are concerned with. I’m not sure how this affects the price of the drug without insurance). According to Schumer, price competition between brand-name and generic drugs is bad for consumers. Why? Because undercutting your competitor on price isâ€¦anticompetitive. Schumer has asked the FTC (the subject of S.M. Oliva’s recent post) to investigate. It is ultimately this government body that decides what is defined as “anticompetitive”. Apparently, allowing consumers to pay less for a product has now become part of that definition.
Source link: http://archive.mises.org/5214/because-drug-price-competition-is-bad-mmmkay/