Many of you know that I take a free wheeling capitalist approach to investments and life but I want to point out a classic case of where government intervention interferes with capitalism and causes nothing but problems.

Background:  Merck has developed a vaccine for HPV.  Undoubtedly, Merck has spent a great deal of money for research and development, thinks it’s a good solution to a problem, and now wants to sell their product to earn a profit.

I have no problem with anything Merck has done so far.

Merck’s Problem:  Merck went around trying to sell this vaccine to various states primarily through the legislative process (i.e. Offer vaccine through state and require it for school girls).  They started in Texas and I have no doubt they started there because they figured if they could sell it in this “conservative” state then they could sell it anywhere.   The problem arose when the majority of Texas legislators (and citizens) balked at making it mandatory for school girls in the sixth grade. Result: No Sale.

This is where capitalism would declare its victory for the society it serves.  Merck developed a product, tried to sell it and failed.  The marketplace took care of the issue.  It is a product that perhaps is too far ahead of its time and should have been shelved for some future date.

BUT……

In steps, Governor Rick Perry with an “executive” order mandating this drug be injected to all school girls entering the sixth grade.  The free market has been circumvented by a government bureaucrat with questionable ties to Merck lobbying groups and campaign contributions.
I’m not exactly sure what will happen next but if this order holds I can see a few things happening:

1. This drug isn’t cheap and it’s been estimated to cost at least $360 and mandating it will likely increase health insurance premiums for the average person.   I don’t know how many 6th grade school girls there are in Texas but I’d guesstimate at least 1 million.  This translates into at least 360 million dollars in additional health insurance costs to insurers and ultimately you and me.

2. For those people that can’t afford the drug, I’m sure tax payers will be required to pay more in taxes to cover the cost of the drug.  I’m not sure how much of the 360 million will be allocated to tax payers but I’m sure it’s in the millions.

3. This drug has only been tested on 2000 girls and there have been numerous side effects reported that include loss of consciousness, seizures, arthritis, and other neurological problems.

So with a stroke of the pen, a governor meddled in the affairs of the free market and actually created cascading disruptions to the health insurance and health care industries.

Start preparing your budgets for an 8% increase in your health insurance premiums.