The Magazine

Politics vs. Medical Progress

The Bush administration flirts with price controls.

Jun 25, 2001, Vol. 6, No. 39 • By ROBERT M. GOLDBERG
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Past efforts to "recoup" NIH research dollars other than through royalties inspired price caps imposed on companies partnering with government scientists. Such limits on future return on investment drove biotech capital and researchers away from NIH projects. As a result, potentially useful science was left without support, and the public’s investment in biomedical research was wasted when NIH failed to find partners to produce new drugs. When the recoupment requirement, imposed in 1989, was eliminated in 1994, cooperative research flourished again.

Further, Thompson expressed support for senator Bob Graham’s Medicare drug benefit as part of an overall Medicare reform. The problem is, Graham’s plan, like one proposed in 1999 by President Clinton, relies on government price controls and drug lists. To get a taste of what medicine would be like under the Clinton drug benefit, take a look at the Veterans’ Affairs drug lists. Under the VA regime, if you have pancreatic cancer or schizophrenia or depression, you have to fail on several cheaper drugs before you get access to the more expensive, more effective medications.

Such price-control measures not only would derail Medicare reform but also would threaten medical progress. The administration needs to take the long view of health care reform. Price controls will stop the transformation of medical care. They will promote the expensive and medically futile, labor-intensive delivery of services at the end stage of disease and at the end of life, rather than encouraging the innovative, capital-intensive use of breakthrough medical technologies to detect the first signs of disease and intervene early, which is always more cost-effective and boosts independence and human productivity. Price controls, whatever the mechanism by which they are imposed, militate against medical progress. What is the administration thinking?

Robert M. Goldberg is a senior policy fellow at the National Center for Policy Analysis.