Free Markets: The Key to New Drugs at a Reasonable Price
By Richard E. Ralston
September 19, 2003
Government control of prescriptions drugs and their prices would
blow up the pipeline of the new medications that have significantly
improved the lives of millions of Americans.
The U.S. pharmaceutical industry spends $22 billion a year on
research and development of new drugs. Unlike government-funded
research—which can be spent to develop drugs that no one needs
or that duplicate existing drugs—pharmaceutical companies must get
results. In order to recover their investment, their new drugs
actually have to work. The continuing flow of new drugs that these
firms produce is the best hope we have to treat and cure our
Senator Edward Kennedy is a longtime advocate of government-run
health care and he has serious long-term plans for government
intervention in the medical profession. Kennedy, who co-sponsored
the HMO Act of 1973, which instituted subsidies for HMOs, is the
person most responsible for the Senate’s Medicare prescription drug
plan and he has made it clear that drug subsidies for seniors are
the first step toward government control of medicine. Kennedy’s
stated priority for the next step in this process is government
control of prescription drug prices.
In addition to discovering and testing drugs, pharmaceutical
companies also face enormous administrative costs to obtain FDA
approval to put drugs on the market. Hospitals and physicians who
dispense drugs also absorb the high cost of complying with a
dizzying array of government regulations. If drug firms know that a
drug’s price is established by the state—not by patients—there is no
interest in discovering, testing and creating new drugs.
Drug prices have gone up because demand for better drugs has gone
up. Drugs that provide astonishing new relief or a cure are priced
high enough to recover development costs and provide capital for
more effective research.
Yes, scientists working hard to develop new drugs make a lot of
money—and they should. They deserve it. A free market in
pharmaceuticals is the only way to insure the flow of new,
breakthrough drugs and competitive pricing.
An authentically free market means other companies—anywhere in the
world—are free to develop drugs that are equally or more effective,
or competitors who produce similar drugs that are almost as
effective at a lower price.
Controls on drugs, doctors, and prices will distort the drug market
from the science stage to the pricing stage. Congress must face the
fact that its laws cannot create a single new drug and that
government force will only restrict and inhibit the scientist
seeking new medicines.
Advocates of government-controlled medicine, such as Senator
Kennedy, assume that any new drug brought to market—at whatever
cost—must be provided by those who produce it to anyone who wants it
at a price determined by government decree. According to this view,
the government, and only the government, should supply each of our
most basic needs.
The result will be a nation of people dependent on government
handouts for all essential requirements of life—hardly the republic
of free, prosperous individuals the Founding Fathers envisioned. But
even the pathetic prospect of the American people lining up for
government drugs will not reverse the laws of cause and effect:
great minds—including those working in science, medicine and
pharmaceutical research—will not work under coercion and neither
President Bush nor Senator Kennedy nor their state-sponsored
prescription drug coverage will insure a continuing development of
effective new medication.
Americans who cherish their freedom, particularly seniors who
treasure their independence, must reply to the threat of government
prescription drugs with the only appropriate response: Leave my
drugs—which means those who produce them—alone!
Richard E. Ralston is Executive Director of Americans for Free Choice in Medicine.
Copyright © 2003 Americans for Free Choice in Medicine. All rights reserved.
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