Stiff FDA regulation imposes high costs on development of new and innovative drugs in the United States. But stiff competition in America’s free markets still enables America to lead the world in development of new, cutting edge, breakthrough drugs, leading the world in treatment and care especially for America’s seniors, most in need of the world’s best health care.
Foreign countries often free ride on America’s free market system, gaining access to the drug breakthroughs after American patents run out, without allowing the freedom for the innovators to recoup the cost of their heavily regulated innovation. That is one reason why citizens in those foreign countries often have to wait in long lines for their health care.
That is also the reason that Americans enjoy the world’s greatest access to cutting edge drug therapies and treatments, extending life for seniors and quality of life. Foreign, socialist price controls deprive their citizens of these latest, modern, cutting edge drugs, by cutting off the investment needed for development of those drugs, due to the limited returns allowed by their price controls.
This is similar to what happens under rent control, which sharply reduces the supply and availability of modern housing wherever such price controls for housing prevail. Drug companies that achieve miracle cures for their American customers are often criticized harshly by grandstanding politicians that have never themselves produced anything to save lives and improve the health of anyone.
But if those same Socialist price controls were imported to America to be used for Medicare, seniors would lose access to the cutting edge, modern drugs that are saving their lives today. As the President’s Council of Economics Advisors explained, if the United States had adopted the Socialist drug price control policies of other developed nations twenty years ago, then the world would not have highly valuable treatments for diseases today that required significant investment.
Without the freedom to recover for the high costs of regulation imposed by the FDA, investors would not be drawn to finance the innovative, breakthrough, modern drug therapies that seniors enjoy today, saving lives and improving the quality of their lives. When your mother suffers from life threatening cancer or heart disease, you expect her to get the latest, most modern treatments and drugs from our competitive free market health care system. That is because under our American free market health care system, American patients enjoy access to 90 percent of all modern drugs available worldwide.
That is why 60 conservative organizations joined in a letter organized by Americans for Tax Reform (ATR) to oppose the adoption of foreign Socialist price controls for Medicare in America. That price control system would be based on an International Price Index reflecting prices allowed by foreign Socialist governments, where patients do not enjoy the latest, cutting edge breakthrough drug therapies. America, by contrast, utilizes the Average Sales Price established in free markets for the prices of the new, innovative drugs that serve seniors under Medicare so well, providing longer, higher quality lives well into older age.
The ATR organized letter stated that price controls imposed on medicines suppress innovation and access to new medicines, deterring the development and supply of new life saving and life improving medicines to the detriment of consumers, patients, and doctors. The U.S. is a world leader in research and development because our system of healthcare rejects price controls and encourages innovation.Consequently, a majority of new medicines are developed and launched in America.
America does not follow the failures of other countries. It leads by shining example to be followed by others.
Peter Ferrara is the Dunn Liberty Fellow in Economics at the Kings College in New York, and a senior policy advisor to the National Tax Limitation Foundation. He served on the White House Domestic Policy Council under President Reagan, and as Associate Deputy Attorney General of the United States under President George H.W. Bush.