RUSH: John in Nebraska. John, welcome to the EIB Network. Hello, sir.
CALLER: Hi, Rush. Just got a quick story and then I have two quick questions.
RUSH: Yeah.
CALLER: Been married for 15 wonderful years.
RUSH: Congratulations, sir. That’s wonderful.
CALLER: Thank you. This week had a very awkward moment. My wife comes in from getting a haircut, or getting her hair done, and when she walks in the door we kind of look at each other and we both know what each other’s thinking. I’m staring at her and she’s kinda looking down at the ground and what I say was —
RUSH: Wait a second. Don’t lose your train of thought there. Has somebody died?
CALLER: No.
RUSH: Geraldo just showing up to talk about Tiger Woods here on Fox. He’s a grim reaper there. When Geraldo shows up, somebody’s either dead or they’re going to die pretty soon. I’m sorry to interrupt, I just thought maybe something had happened I didn’t know.
CALLER: No problem.
RUSH: You were saying, your wife walked in with a hairstyle change, you both knew what each other was thinking, which was what?
CALLER: What I said was, ‘Holy Lord, you look like…’ and in a low tone, she says, ‘Don’t even think about it.’ And at that moment I said, ‘Rachel Maddow.’
RUSH: Oh, no.
CALLER: And —
RUSH: You said it.
CALLER: It was a blur after that, but my poor wife. Well, poor me, too.
RUSH: (laughing)
CALLER: See, I have two quick questions. One is, okay, the health insurance, you know, they talk about doing it over state lines. Insurance is based on, you know, spreading the risk, more people in the risk pool, lowers the cost. Why can’t we open it up worldwide? That’s question number one. Number two is the cost of medicine. You know, how much is it costing it manufacturers to make it? Where is this price getting inflated at? Is it at the pharmacies? And, if so, you know, can the government possibly, instead of paying the pharmacies’ rates, why can’t they pay the manufacturers’ rates, sell it to the pharmacy, so it’s going to cost the government less?
RUSH: Well, now, on the latter, I have a very simple market-based understanding of drug prices. And I have been led — I’m pretty much convinced that on the drugs that people need — the newest, the latest — the R&D on these things is through the roof. The regulatory process, the hoops they have to jump through at the Food and Drug Administration at every level, all the testing, the blind testing, the placebos and the regulations here and regulations there — I think the cost of bringing a drug to market would stun us.
CALLER: What would be interesting is to find out the cost of the drug at the manufacturer, and then what the markup is once it hits, like, Walgreens or whatever.
RUSH: Well, that changes over the course of time, after they make the R&D back, it takes them awhile to make back the R&D, the production costs, and that’s when prices start coming down. I don’t know what pharmacy markups are.
CALLER: What about the health insurance that I had suggested?
RUSH: Well, now, the reason that the states are the ones — of course Obama, Democrats — states are the ones that do not want insurance companies to be able to sell across state lines because every state has different mandates on these insurance companies. Alabama — and I’m just picking Alabama at random — Alabama may mandate certain kinds of coverage at certain kinds of premium, they may say you can’t cover this and you can’t cover that, and as such, they don’t want Texas to be able to counter what their mandates are with something that would undercut Alabama. So we don’t have a single mandated system here that says what insurance policies can do. I’ve had so many insurance agents call here and tell me —
CALLER: — health insurance —
RUSH: — they’re going to Costa Rica.
CALLER: Just think about what health insurance being available in a worldwide market would do as far as pushing the capitalist agenda, getting more people off of government — say over in Europe, getting more people off of the government —
RUSH: Well, in theory I like what you’re talking about, but you’re going to have a different quality of health care system from country to country to country.
CALLER: Sure.
RUSH: And it’s —
CALLER: But health care here is not the issue, it’s the cost. And that’s another thing is the health care crisis. It’s not the health care crisis, it’s the cost of care.
RUSH: It’s the cost, not just the cost, but access. And there are so many mandates — I had a story in the stack a couple days ago —
CALLER: Everyone has access, but to what degree?
RUSH: Well, some only have access through the emergency room, but others don’t want insurance because of their relative youth.
CALLER: Sure. They can afford it. Or they can afford not to have insurance, I understand.
RUSH: Yeah. I can’t find it. But there’s an insurance company, ‘Wellness’ or something like that in California, that just bumped up rates 39%. And the Democrats are saying, ‘See, see, see? This is why we need national health care! See, see? This is why! Because look how they’re screwing their customers!’ And the truth of this story — the Wall Street Journal did a great story on it — the truth of this is that this is exactly what’s going to happen if Obama’s health care takes over. The reason they are raising rates out there is because of the restrictions and the mandates the state of California puts on them!
You know, if you look at the cost of a house, you look at the city, state, whatever regulations there are before you can get a permit to build and construct and you get your occupancy permit, if you take all of these onerous state, city, federal regulations out of so much of what goes on in the private sector, you would not believe how cheap things would become! And that’s true of drugs, it is true of building a house, it’s true of building commercial real estate, developing commercial real estate. It’s just onerous as it can be. You can’t build because of a snail darter, environment or whatever… It’s ridiculous. And it’s been building, and this is all found to be percolating in the property rights movement.
Okay. In New Jersey, the governor appoints. So if Frank Lautenberg were forced to resign because of this illness, Chris Christie would be able to appoint. I imagine right now, as we speak, the Democrat legislature in New Jersey is meeting to create a law that requires a special election. And they’re trying to make sure that they will have enough votes to override a gubernatorial veto. This is what Kennedy did in Massachusetts. They demanded a special election there, and, what was it? The law was in place, and they didn’t like the law, they had changed it previously to make it more advantageous, so they changed it again to make it what they thought would be more advantageous this time, and it ended up Scott Brown being elected. So they sort of shafted themselves and the Democrats in New Jersey will do the same thing if they start monkeying around with this.
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RUSH: ‘Please, Rush, there are inspectors and building officials out there very honest, and we work our rear ends off. Come on, Rush. There are honest conservative building inspectors and building officials, which I and my stuff just happen to be. We don’t get paid off, maybe in Florida, but not here. Please don’t dump us in with everybody else with a few bad apples. We take our jobs very seriously just like you do yours and we do save lives with what we do.’ A fair comment. It’s a joke. It’s primarily in New York, California. I’m not aware of any shenanigans here in Florida, and believe me, there are a whole — do you realize, folks, that where I live, you have to get approval from some town commission on how you’re going to paint your house and how it can be decorated? Ho. You do. And if your neighbors don’t like it, they can show up, complain, whine and moan, even if they’ll never see it. So we got even with them. I’m not going to tell you how. I’m not even going to go there. I’m not even going to go there.
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RUSH: Emily in Indianapolis, great to have you on the EIB Network. Hi.
CALLER: Hi, Rush! It is an honor it’s an honor to talk to you and thanks for all you do.
RUSH: Thanks very much.
CALLER: I work for the big, evil pharmaceutical company and I wanted to let you know that you are right about the cost of pharmaceutical drugs. It is research and development, and it can cost hundreds of millions of dollars to bring a novel product to market, almost a billion dollars to bring, you know, medicines that save lives and help people live better lives. So I just want to let you know you’re right about that.
RUSH: Yeah, I know. A lot of people, even when they hear that, they think that they’re being lied to because they’ve been conditioned to suspect all of big business by the Democrat Party for all of these years. But tell us, if you will, very briefly, I’ve got about a minute and a half year, give me an idea of just the hoops, the regulatory hoops at the FDA you gotta go through when you come up with an idea for a new drug.
CALLER: Well, I’m probably not as knowledgeable as I’d like to be on that, but what happens is once a molecule is recognized by the scientist and it’s gone through its animal studies and safe for human consumption, you know, these studies are years —
RUSH: Oh, yeah, I forgot the animal testing.
CALLER: Exactly. But we have to make sure it’s right for human consumption and, you know, people want to have safe medication, medications that can change your lives and improve the quality of life, and it takes years and lots of dollars to get these drugs to market, and it’s very important.
RUSH: This is a stupid question, but the only way to not stay stupid is ask for an answer. The relationship between a pharmaceutical company and a pharmacist or a nationwide pharmaceutical chain, who determines the price markup there?
CALLER: I think it’s between the company and again, this is probably out of my league, it’s between the company and the pharmacist —
RUSH: Well, but, see, there’s another factor in there, too. You can choose a whole bunch of different pharmacies to go to. So if a pharmacy wants to offer a spectacular new drug at a lower price than what they think somebody else is offering, they’ll do that, too. Free market usually works these things out if it’s left alone but when you start tacking on all kinds of onerous regulations and requirements, just raise costs, you end up paying for it at the end of the line, which is retail.
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RUSH: Now, we’ve got a pharmacist on the phone from Chicago. I’m going to get to him in just a second. He’s going to tell us where profits go which means I’m going to ask him which union in Chicago gets his profit. But I have a friend in Kansas City whose family owned a food product, I’m not going to mention the food product, but you’ve heard of it. They sold it. They sold the food product. It’s still there on your shelves in your favorite grocery store. The company that bought it decided it would make more sense to buy an existing product that was already a success than to start from scratch, do the R&D, and come up with a new product, because it could take between twenty and a hundred million dollars to create their own. So they scarfed up an existing product. The company, the family that had the product liked the money and they got out of it. These are just the facts of life. R&D drugs, R&D new food product, whatever it is, if you’re starting from scratch, and you don’t have any in that product line, it’s going to cost you big bucks and you gotta make it back at some point. Now, here’s Kirk in Chicago, a pharmacist who’s going to tell us where the profit goes. What union gets your profits in Chicago?
CALLER: There’s a lot of unions getting my profits in Chicago, Rush.
RUSH: (laughing.)
CALLER: Good to get on the air with you for the first time here, a long time trying and this time I tried about 70 times because I really wanted to get through here —
RUSH: I’m glad you did. I’ve got about a minute. I don’t mean to cut you short but time is running out.
CALLER: Quickly, you know, it’s all based on volume, basically one to three percent profit markup at your pharmacy counter.
RUSH: So it’s kind of like food in the grocery store?
CALLER: Exactly. And that’s why we do such a volume. And when you look at the pharmaceutical industry, there’s so much failure in terms of the pipelines that go on, you’re looking like 4%. This is something that I wrote about when I was actually in college —
RUSH: Yes, you know what —
CALLER: — it infuriated the liberals, they were just furious, they said, ‘Where did you get your numbers? Where did those numbers come from?’ It really lit ’em up.
RUSH: No, no, no. That is an excellent point. We never hear about the drug failures, the ones that don’t work, even that get to market, they’re not being prescribed and don’t work and they have to recall ’em or whatever or they just never make it and all that has to be made back, too, as well. I don’t know, for example, Zicam, big sponsor here, I don’t know what the original startup cost for Zicam was. But I do know that it wasn’t until they started advertising the product here that they started a huge, huge profit spike. Of course we’re very proud of that but their product is very affordable. And you know what they’ve had to go through, FDA banning one of their delivery systems just because they’re sponsors here, they’ve had to go through a whole bunch of stuff for a product that works, and now they’ve got all kinds of new delivery systems and they’ve had to R&D that, but they keep their prices down because market dictates it. My favorite kind now is the new oral spray, four times in the mouth, first time you think you get a cold, stuff is amazing. But this is econ 101 that is not taught enough in the school system. I wish we didn’t have to go but I do, the constraints of time are such that I cannot bend the clock.
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RUSH: Look, folks, Snerdley reminded me to do this on Monday. I’ve got a story here about premiums are jumping 14% on Medicare private plans because of government regulations and actions. Here’s Obama telling us how his health care plan’s going to reduce costs and his own government is causing a 14% increase in Medicare coverage or private plans.