Re-evaluating Chinese currency remains a bad idea
WHAT IT MEANS AND WHY IT’S IMPORTANT Herbert Hoover is alive and well — and picking up his prescriptions at the local drug store.
(THE NEWS: Retailers urge Congress to reject Chinese currency legislation. For the full story, click here.)
Of course, he isn’t. But if he were, he might have some advice to offer current members of Congress and occupants of the White House based on his experience with the Smoot-Hawley Tariff Act of 1930, which attempted to rescue the U.S. economy by imposing tariffs on imported goods, but instead ignited a trade war that many historians blame for deepening the Great Depression.
The legislation to impose tariffs on Chinese imports as a way to force it to revalue the yuan is based on the assumption that China manipulates its currency to make its manufactured goods more competitive in the U.S. market. Thus, the reasoning goes, if China were to revalue the yuan, it would help American manufacturers by making Chinese imports more expensive and American goods more competitive in China, thereby helping to ease the U.S.-China trade deficit, which totaled $226.9 billion last year and has so far reached more than $145 billion this year, according to U.S. Census data.
But it’s not that simple. In 1930, the United States manufactured most of its own consumer goods; but that’s no longer true, and the bulk of consumer goods, from toys to digital cameras, now come from China. Also frequently lost in the melee is the fact that most of the supposedly Chinese goods are not Chinese at all, but rather products with American, Japanese, Korean and European brands that are assembled in China. Unlike in the 1970s and 1980s, when such Japanese companies as Sony were eating the lunch of such American counterparts as General Electric, the “Made in China” label now graces the products of both.
For that reason, if legislators imposed big tariffs on Chinese goods or if China dramatically revalued the yuan, it would simply force retailers to pass the extra costs to consumers. So after picking up his prescriptions, Hoover would find the digital camera he had planned to buy from behind the counter noticeably more expensive. While this would not likely lead to another Great Depression, it would certainly diminish consumers’ purchasing power.
As for the manufacturing jobs, many experts have said they would simply migrate to cheaper countries rather than returning to the United States. This trend already is under way in textiles, as many clothing companies have started moving factories from China to such countries as Bangladesh in response to the increasing costs of manufacturing in China.
Fresh & Easy develops line for kids
SAN DIEGO Fresh & Easy is promoting its new line of products aimed at childhood nutrition.
The line, fresh&easy Goodness, is made using such wholesome, natural foods as whole grains, fruits and vegetables, as well as other foods that are good sources of vitamins and minerals. Fresh&easy Goodness products also contain no artificial colors, flavors or preservatives, no added trans fats and no high-fructose corn syrup.
"We fundamentally believe every family deserves access to fresh, wholesome food at affordable prices," said Fresh & Easy CEO Tim Mason. "Everything we do derives from listening to our customers, and one thing we’ve heard consistently from parents is that they are looking for ways to feed their children high-quality, nutritious foods without stretching their budgets. Fresh&easy Goodness for kids offers an affordable and convenient solution for busy parents that won’t break the bank."
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Efforts to combat Medicare fraud draw mixed signals from indies, PBMs
WASHINGTON The independent pharmacy and pharmacy benefit management industries both praised new efforts by Congress and the Obama administration to end the fraudulent and abusive billing practices that plague Medicare and Medicaid and cost U.S. taxpayers tens of billions of dollars. But their recommendations for combating the problem are as different as their approaches to the pharmaceutical market.
The Centers for Medicare & Medicaid Services proposed new regulations to help prevent what the agency said is $55 billion in annual improper payments to providers and health plans. In a related development, the House Energy and Commerce Subcommittee on Health is looking at ways to attack the problem, and held a hearing Thursday titled, “Cutting Fraud, Waste and Abuse in Medicare and Medicaid.”
The National Community Pharmacists Association weighed in with a statement to the House panel that accused the pharmacy benefit management industry of responsibility for much of the abuse, which the group attributed to a “past record of alleged systematic chicanery.”
In its statement, the independent pharmacy lobby reminded lawmakers of numerous allegations of fraud by major PBMs, as well as “misrepresentation to plans, patients and providers; improper therapeutic solutions; unjust enrichment through secret kickback schemes; and failure to meet ethical and safety standards.” The group urged Congress to pass legislation “to rein in the waste being generated by the business practices of pharmacy benefit managers under Medicare and Medicaid,” and to increase the transparency of PBM audit practices.
Not surprisingly, the response from the Pharmaceutical Care Management Association, the main PBM industry advocacy group, was markedly different. Responding to new proposed regulations from CMS to combat fraud and abuse, PCMA president and CEO Mark Merritt said the government’s focus should be on preventing abuse rather than on pursuing wrongdoers after the fact for fraudulent billing practices. “Pharmacy benefit managers agree that prevention, not ‘pay and chase,’ is the key to fighting fraud,” Merritt noted. “Unfortunately, some public policies undermine the fight against fraud by requiring payers to include pharmacies in their networks that have been banned from federal programs.”
Merritt also reiterated PCMA’s call for legislation to eliminate legislative “prompt-pay” requirements that force pharmacy benefit plans to quickly pay prescription claims, raising again a major source of friction between the PBM and retail pharmacy industries. Policies that require payers to “accelerate payments,” PCMA’s leader charged, leave “less time to detect and prevent fraudulent Medicare claims before payments are made.”
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