Government Control Of Drug Prices Will Stifle Research And Development

BY GREGORY CHUDZIK
SPECIAL TO THE HERALD COURIER

The establishment of Medicare Part D meant that the federal government, for the first time, would pay for prescription medicines used by American senior citizens.
This benefit may ultimately cost hundreds of billions of dollars over the next 10 years or so. The legislation led many to believe that the federal government should use its purchasing power to force prescription prices to be much lower. Unfortunately, the cost of producing drugs continue to rise.
FOR EXAMPLE, the average research and development cost for a new drug was $897 million in the late 1990s. This was more than double the average cost in the 1980s and more than five times the cost in the 1970s. As one who has been involved in drug development for more than 30 years, I personally have seen a tremendous increase in the cost of research. Additionally, as a consumer, I have seen a tremendous increase in the price of prescription medications.
Consequently, ever-rising consumer prices for health care have motivated political candidates to call for a “universal” solution to our heath care crisis. Such a policy might in the short run allow some consumers to obtain their medications at lower prices and provide some savings for the federal government and in turn for taxpayers.
However, in the long run we can expect serious adverse effects on the general public, mainly in the form of declining investment in new drug research and development and the subsequent loss annually in expected life years.
As an example, the last two Interscience Conferences on Antimicrobials and Chemotherapy meetings featured large seminars centered on the perceived decrease in antibiotic research. We, as a country, are facing a major problem with certain highly resistant bacteria, such as MRSA and VRE [Vancomycin-Resistant Enterococcus], causing many more deaths than we saw in past years, and we have fewer “weapons” to use when treating these infections. This dilemma may well be due to the poor economic return for the high cost of development of new antibiotics.
The problem is further illuminated by the Congressional Budget Office in a 2006 report on research and development in the pharmaceutical industry. It points out that while the federal government spent more than $25 billion on health-related research and development in 2005 only some of that spending is explicitly related to the development of new pharmaceuticals and much of that part of the spending is devoted to basic research on the mechanisms of disease, which might serve as underpinning for the pharmaceutical industry’s search for new drugs.
THE CBO report goes on to show that federal r&d spending can crowd out private spending indirectly by causing labor costs to increase. The government and the drug industry both draw on the same supply of trained professional researchers, a relatively small supply. Higher spending can cause salaries to rise by increasing the demand for researchers.
We, as consumers, believe we deserve the very best in medical care; the very best in pharmaceutical therapy; the very best in diagnostic tools. However, a major part of the health care delivery problem rests in the mind set of 21st Century Americans who think the federal government should assume a more paternal role by providing and paying for our health care. This attitude can only lead to a “status quo” routine and an end to innovation and progress in health care. This is a move tantamount to national suicide. We must assume responsibility for our own health and our own behavior.
Further, we assume that elected and appointed officials, who have repeatedly failed to meet many of our other everyday needs, have the qualifications and abilities to step forward and take responsibility for our health care. They do not, because politicians and bureaucrats think mainly in the short term and have little accountability for wasteful spending and failed government programs. Therefore, Americans put themselves at enormous risks by placing in the hands of government a matter as important as their personal health.
A BETTER solution, one that has best served our economy and the public over the years, is to enable the free market forces that promote choice and competition unencumbered by excessive government bureauracracy. To promote, not provide, good health care is a legitimate government responsibility. Ultimately, the results will be cheaper, better and more accessible health care for all Americans.