Price is too high for drug cost controls

Posted: Dec 05, 2006 8:01 PM
Price is too high for drug cost controls

It sounds like a no-brainer: The Democrats promise to negotiate with drug companies for lower drug prices for Medicare. Who could be against that?

Here's the problem: Once the government pays for prescription drugs, it has every incentive and the power to institute some version of price controls. That's what has happened in Canada and virtually every other socialized medical system in the world.

Who wouldn't want the government to insist on cheaper prescription drugs? Well, me, for one.

I'm an insulin-dependent adult-onset diabetic. Yes, Personal Responsibility Police, I know it's probably my own fault. If I had lost weight and worked out, I might not have this chronic illness. Instead I did what many type-2 diabetics do: largely ignored the disease for many years until symptoms appeared that scared me.

This summer, I finally got serious about blood sugar control. I found that in my 10-year hiatus from paying attention, a number of new technologies had been developed that have made my job much easier. Some sound small: better blood sugar monitors that are just a little bit easier to use (but when you prick yourself six to eight times a day, small improvements add up).

But the really big miracle for me was a new drug: Symlin (a synthetic version of the hormone amylin), which I inject along with insulin three times a day. My blood sugar dropped 40 points, and my disordered eating patterns essentially disappeared overnight. (Yes, I believe in personal responsibility. I also now believe in having enough amylin in the digestive system.)

Symlin is only about a year old. It's expensive (about $250 a month for the amount I need). But I want the people who made this drug to make oodles of money. Because I want the best brains in America to be out there searching for the next big or small breakthrough, not only in diabetes, but in Parkinson's, heart disease, cancer, multiple sclerosis and all the other diseases that people I know and love suffer from.

Joseph Golec and John Vernon from the National Bureau of Economic Research recently released a study quantifying the negative effects drug price regulation has had on European drug innovation. As recently as 1986, European Union spending on drug research and development was 24 percent higher than the United States. By 2004, European spending on the next generation of miracle drugs trailed the U.S. by 15 percent. The bottom line? Price controls translate into 46 fewer new medicines introduced by European firms. The price of drug price controls can be just too high.

Canada, a small nation, can regulate drug prices because frankly Canadians aren't depending on Canadian drug companies for the next great medical innovation. Like most of the rest of the world, they depend on America.

The ideal system would find ways to lower cost and other barriers to care for the older generation of medicines, without reducing the enormous incentives high profits create to invent new medical miracles.

Yes, it might mean tolerating "second-best care" for citizens unable to afford to the latest new drugs. But that second-best would be constantly improving as each year, more of today's expensive innovations become tomorrow's cheap generic drugs, hopefully coming soon for $4 a month to a Wal-Mart near you.