I Want a New Drug
Why price controls will stop pharmaceutical progress.
Jun 16, 2003, Vol. 8, No. 39 • By WILLIAM TUCKER
This much is certain. A national regime of price controls for prescription drugs will play havoc with medical progress. When the Clinton administration toyed with price controls in the days of Hillarycare, the annual increase in drug-research funding fell to single digits for the only time in the last two decades.
Should research funding decrease, critics of the pharmaceutical industry argue, the National Institutes of Health could carry the burden of new discoveries. Indeed, they argue that NIH is already subsidizing the drug industry by doing basic research. However, NIH funds only $20 billion of research a year in all fields, while the drug industry spends $30 billion on biomedicine alone. Also, NIH confines itself to basic research and does not approach FDA testing. With the cancer drug Taxol, for example, NIH spent $32 million over 30 years testing fewer than 500 patients. In 1991, Bristol-Myers Squibb licensed the compound and spent $1 billion shepherding it through FDA approval. Only then did Taxol become a major cancer treatment.
America is virtually encircled by countries already imposing drug price controls to support their nationalized health care systems. Europe and Canada have dried up their homegrown drug research by fixing prices. Continental Europe now produces less than one-third of the world's new drugs, even though the testing procedures there are less demanding. Prices are so out of line that American resellers have taken to purchasing American drugs abroad and importing them back into the United States for sale at discount rates.
That only makes it more important that the United States hold the line. Europe and Canada are essentially piggybacking on American medical research. Half the new drugs in the world are now developed in the United States. There is nowhere else to fall back on. If we start imposing price controls, the medicines we use today are the same ones we'll be using 20 years from now.
William Tucker, a columnist for the New York Sun, is a fellow at the Discovery Institute.