One of the classic songs of the rock n roll genre was Led Zeppelin’s “Stairway to Heaven”. In that song, they wrote:
“And if you listen very hard
The tune will come to you at last
When all are one and one is all
To be a rock and not to roll.”
Some people think that different products or brands for one category should be priced as one, or at least the top or highest price among varying prices should be capped to a level that is deemed “affordable” to many people, so that those people can have their “stairway” to good health, fame, greatness, or whatever. The premise for this thinking is that some producers or manufacturers are evil and driven only by greed, and not the health and welfare of many people.
But people are diverse, and so are the various products and services that they produce. Diversity is the rule, not the exception. Producers and manufacturers face diverse production and marketing costs, like different taxes by different governments; different wages by different workers with different skills, and so on. And consumers have different aesthetic or health reactions to similar goods and services.
Thus, price segmentation – different prices for different products or services for different people – is a perfectly rationale and healthy mechanism. This way, people from different economic status can be served. Think of ticket prices in a single championship boxing fight: ringside seats are the most expensive; prices descend as one is seated farther away; for those who cannot afford even the cheapest ticket, they can watch through pay-tv which are cheaper and still watch the fight live. And for those who cannot even afford the pay-tv, or have no access to pay-tv, they can watch the game free via delayed broadcast by tv stations which paid their way inside the boxing stadium. At the end of the day, everyone who wanted to watch the fight was able to see it, live or delayed. Such is the beauty of price segmentation, or “tiered pricing”. But some people think this is ugly if not evil. Because only the rich are served well while the poor are served late or delayed, and they are pestered by too many tv commercials and ads.
Extend this thinking to the prices of food and medicines, and this group of people will push for price regulation or price control. That is, some bright men and women, often those in government bureaucracies, can determine and dictate which products are useful to people and which prices of these products should be allowed and which ones should be controlled. But can price control lead to good health?
The authors of the House version of “cheaper medicines bill” think it can, that is why they want to create a Drug Price Regulation Board. They think that high profits and high advertising costs by pharmaceutical companies – not high and multiple taxes, high cost of R&D in medicine innovation, related costs – are the main roadblocks why many people cannot have their “stairway to good health”. Hence, prices of certain medicines should be regulated, and people from the Health Department, Congress and other government bureaucracies, some civil society groups, have enough wisdom and heart for the sick that they can determine which prices are tolerable and which ones are not.
When prices are controlled, then producers who can possibly make some “miracle” products and medicines at sky-high costs will be discouraged from innovating and producing those products. Government puts up uncontrolled taxes, fees and regulations, then control the price of commodities later. This is unfair. And this will not lead to “stairway to heaven of good health”; rather, lead to a “stairway to bureaucracies and product