ABSTRACT
In the previous chapter, my discussion of the demand for pharmaceuticals only considered the private demand for pharmaceuticals. However, in the last forty years, federal government demand has become an increasingly important determinant of the demand for all kinds of health care goods and services. For example, in 1960, before the advent of Medicare and Medicaid in July of 1966, federal government health expenditures were only 11.1 percent of total health care expenditures, whereas, they were 30.8 percent of the total in 2004 (U.S. Census Bureau 2004-2005). Prior to Medicare and Medicaid, the public responsibility for the government provision and payment of health care services rested mainly with state and local governments.
