PBMs are private businesses that manage prescription drug benefits on behalf of insurance-plan sponsors. They negotiate with drug manufacturers and pharmacies. Manufacturers trade lower prices for formulary access and more sales. Pharmacies trade discounts and increased retailing requirements for favorable placement in plan networks and more customers. This selective contracting allows PBMs to obtain rebates and discounts that lower drug costs. It also allows them to encourage the use of drugs that are cheaper (such as generics), more effective, or both. While plan sponsors aren’t required to contract with PBMs, most do, suggesting they value PBMs’ services.
My own study for the Competitive Enterprise Institute, as well as studies by University of Chicago economist Casey Mulligan, found that PBMs foster competition that lowers drug costs. Mr. Mulligan estimates that PBMs produce at least $145 billion in annual value to society beyond their resource costs.
Here’s GMU Econ alum Dominic Pino on Kamala Harris.
Joe Lancaster writes that “Biden’s act is not heroic.”
Arnold Kling likes the gist of what Eric Kaufmann says, but not at all the way that Kaufmann says it.
Art Carden asks: Where will the new jobs come from?
GMU Econ alum Dominic Pino talks with Scott Lincicome about jobs and labor unions.
Chelsea Follett offers “Smithian insights into shrinking global inequality.” A slice:
Furthermore, the majority of people have no objection to inequality arrived at by merit, and there is no evidence of widespread inequality-induced unhappiness. In developing countries, increased economic inequality that arises as part of the population escapes poverty is often seen as heartening—proof that upward mobility is possible—and can coincide with greater average happiness. Research has similarly found “a complete lack of any effect of inequality on the happiness of the American poor.”
Of course, when the rich are protected through privileged status in law, inequality seems far more troubling. Smith recognized that incumbent businesses sometimes gain unfair privileges from the government—in the form of regulations that strangle competition, for example.
Voluntary, peaceful exchange among citizens of a country is a blessing. Why should it be any different when such commerce takes place across international boundaries? Remember, countries don’t trade – people do. The United States doesn’t buy Toyotas or Buicks – you do. And you pay too much for cars, clothes and food because myths about international trade continue to influence politicians, the press and public opinion.
The market is not something invented by businessmen and speculators for their profit, or by the classical economists for their intellectual pleasure. The market is the only possible method by which labor that has been analyzed into separate specialities can be synthesized into useful work.
[T]he evil results of a too extensive solicitude on the part of the State are still more strikingly shown in the suppression of all active energy, and the necessary deterioration of the moral character. This scarcely needs any further argument. The man who is often led easily becomes disposed willingly to sacrifice what remains of his capacity for spontaneous action. He fancies himself released from an anxiety which he sees transferred to other hands, and seems to himself to do enough when he looks to their leadership and follows it. Thus, his notions of merit and guild become unsettled. The idea of the first no longer inspires him; and the painful consciousness of the last assails him less frequently and forcibly, since he can more easily ascribe his shortcomings to his peculiar position, and leave them to the responsibility of those who have made it what it is.
The great undiscerned truth is that the free, or competitive system is the only coordinative mechanism which is compatible with the achievement of heterogeneous ends from heterogeneous means.
The United States can only run a persistent deficit in its current account because it runs an equally persistent surplus in the financial account, which measures the flow of capital across the border. More investment flows into the United States each year than flows out, on net, in large part because the United States remains a safe and profitable haven for the world’s savings. The investment, in turn, fuels growth and job creation.
Nationalism is something which must be surpassed. There was probably never a moment in the history of the world when such a task seemed so difficult to accomplish. But it can be accomplished if our hearts and minds tell us that it is necessary; and it must be accomplished if all that we regard as most valuable is not to perish in the wreck of our common civilization.
