Kiss access to a wide array of drugs goodbye

Marketplace Staff Jan 11, 2007

KAI RYSSDAL: Michigan Democrat John Dingell got some unwelcome news from the Congressional Budget Office yesterday. Dingell’s the new chairman of the House Energy and Commerce Committee. He’s also the author of a bill that will come to a vote on Friday. To allow the government to negotiate prices for Medicare drugs.

The CBO says its research shows Dingell’s proposal wouldn’t save any money. Dingell’s not discouraged: There’ll be a vote on Friday no matter what. But commentator Benjamin Zycher says the legislation is misguided in the first place.


BENJAMIN ZYCHER: I live near Hollywood, and out here there’s no business like show business. And back East in Washington, there’s no business like showboating.

If Congress directs the federal government to negotiate drug prices for Medicare, we’re going to see an increase in human suffering.

Right now, companies managing benefit plans negotiate with drug makers over prices and approved drugs.

That system works very well. Patients have access to well over 4,000 drugs. Seniors pay monthly premiums a third lower than federal projections. Taxpayer costs are about 10 percent lower than originally estimated. When was the last time that happened?

The companies managing the benefit plans have to satisfy actual customers, who want low prices. But they also want access to a broad array of medicines.

The drug producers want higher prices, but they also want to preserve their market shares. And so private negotiations have led to a happy medium.

If the federal behemoth negotiates, sure, we’ll get lower drug prices. But there’s a downside, because voters are not the same as customers. So budget savings would be far more important than patient wellbeing.

The bottom line: Patients would have to kiss access to a wide array of drugs goodbye.

Just look at the Veterans Affairs drug program: It has only about half as many available drugs as the private Medicare programs. And if you’re a patient unhappy with that, no problem. Just write a letter to your Congressman.

In terms of the future, lower prices mean $200 billion less in research and development for new medicines over the next two decades.

Take the child vaccine program. The feds began to set prices. Now there are shortages of child vaccines, and innovation is a thing of the past.

Let’s hope the federal government does not choose slogans over sense. If it does, the ill effects will be with us for decades to come.

RYSSDAL: Benjamin Zycher is a senior fellow at the ManhattanInstitute for Policy Research.

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