Obamacare Cannot Reduce the Cost of Modern Medicine

Reforms Emphatically Not Included In ObamaCare Are Needed To Bend The Cost Curve.

In case you were wondering, ObamaCare has not positively bent the cost curve. In the case of drug prices, it’s your trip, but the mileage may vary. The table included above is a randomly selected index of pharmaceuticals taken from a database published in Bloomberg.com. I took a random walk through the data selecting the first 20 pharmaceuticals I could find with complete price data from 2007 through 2014. The table of sampled drugs follows below.

The Price of Pharmaceuticals From 2007 - 2014

The Price of Pharmaceuticals From 2007 – 2014

In some cases (see Betaseron, Keppra or Lialda in the table above), drug prices have slowed their rate of increase since the passage of Obamacare in 2009. In many others, (see Humulin, Lantus, Levemir, Lipitor, or Tysabi) the cost curve got bent and so did anyone relying on these particular pharmaceutical products. In the aggregate, Billy Tauzin and the Pharma Profiteers got exactly what they wanted when they bought in and helped inflict Obamacare on the rest of us.

Taking the twenty drugs and pricing them into an equally-weighted index (see Drug Price Index (DPI) in the table abocve), the price of pharmaceuticals increased by 9.17% from 2007 to 2009. This rate accelerated to 9.98% from 2009 to 2014. To make the comparison in terms of cost instead of price, I normalized the Drug Price Index (DPI) with respect to the US CPI in Base Year 2007. This gives us a cost increase ($US2007) of 7.66% before Obamacare compared to a cost increase of 7.93% per year from 2009 to 2014.

People understand well that the prices for prescription drugs are a major component of health care expenses. One of the major premises of Obamacare was that it would reduce what the average American had to pay for medical care. By allowing Pharma to co-opt the legislative process, Barack Obama fundamentally undermined his major premise. The cost of prescription medicines went up about 7 2/3 % a year right before Obamacare, it went up 8% thereafter. If the differential were more pronounced, we could argue Obamacare successfully bent the cost curve the wrong way.

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