California: From Wages to Canadian Drugs, Bills Contain Risks for Governor

SACRAMENTO — For six months, Gov. Arnold Schwarzenegger has managed to keep his position unknown on a host of potentially divisive issues. Now he is going to have to start filling in the blanks.

After acceding repeatedly to a Republican governor determined to deliver on campaign promises, the Democrats who control the state Senate and Assembly this week approved a number of measures that likely will force the governor to make some difficult choices.

The Assembly endorsed raising the minimum wage to $7.75, a 15% increase. If the more liberal Senate concurs, as expected, the governor will have to choose between being a champion of low-wage workers or signing a bill that small businesses and the California Chamber of Commerce say will cost the state jobs.

The Legislature is also poised to approve a handful of measures that would encourage individual Californians and state agencies to import prescription drugs from Canada, where they are cheaper. The notion is popular among elderly voters and could save the state millions.

I think the jobs would stay where they were. What would happen is that drug companies would have less incentive to develop costly new drugs if they can't recover their costs. For some popular drugs with high profit margins, I suspect companies will say, "Fine, we're not selling to any county that exports our drugs back to the U.S." Either that or greatly reduce the discount they give to those countries for popular drugs.

For some popular drugs with high profit margins, I suspect companies will say, "Fine, we're not selling to any county that exports our drugs back to the U.S."

Don't assume the "companies" are American. Few are. Lilly is American. And has operations in over 150 countries. The rest can be British, German, Swiss, French. They like the US tax structure and the US high retail prices.

Most of the cutting edge research is now done in America and mostly by American companies, though you are right there is a substantial presence of European subsidiaries in the US. This is a relatively new development for the Europeans had always lead this sector even after WW2. The EU actually has formally bemoan the fact that they no longer have leaders in this industry and have tried to throw monies at the problem but they have had few results - it is infact getting worse for the EU on this score. All of this is because of the price cap policies of the EU which is a strong disincentive for long term R & D in Europe. IT certainly has nothing to do with any sort of "American Genius" for pharmaceutical research and does not have that much to do with a "tax structure" over here. It is mostly all about price caps and other aspects of socialized medicine.

New Drugs cost money and it is not a business with high margins once sunk costs are factored in.

It is time to squarely face the cost of medicine in this country and it is not those "evil drug companies." It is government subsidies, high insurance, litigation and the strangle hold that professional organizations have on access to the medical profession that drive up cost.

The sad thing is that there are just too many vested interest to stop the train wreck of socialized medicine from happening in the USA. The solutions are obvious but unless there is a determined and prolonged effort to educate the American people we will gradually see socialized medicine come to pass.

When is happens we might find that India, of all places, becomes the drug research capital of the world.

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