The Magazine

Nickel-and-Dimed to Death

Price controls for prescription drugs are a prescription for disaster

May 22, 2000, Vol. 5, No. 34 • By ROBERT M. GOLDBERG
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BY URGING PRICE CONTROLS on prescription drugs, killing Medicare reform, and then proposing a universal drug benefit for senior citizens, congressional Democrats and the Clinton administration have launched a war against drug companies that they hope will help them regain control of Congress and retain the White House in 2000.

Republicans at first sat in silence hoping the issue would simply go away. But the high price of prescription drugs is now the hot button issue of American politics, and the GOP is on the defensive. House Republicans as a result have unveiled their own prescription drug benefit for seniors, one that would subsidize private insurance for lower income and chronically ill individuals. Insurance companies are hostile to this measure, though, so the only GOP alternative on the table is senator Slade Gorton's, which is even more radical than the Democrats': Force drug companies to sell products in America at the lowest price found in either Canada or Mexico.

Gorton is in a tough reelection fight in Washington, where the issue of drug prices is especially controversial because of his state's proximity to the cheap prescription drugs doled out by Canada's price-fixing national health bureaucracy. So his political position is understandable. But he and other recent converts to the price-control crusade who would spread the practice of government-regulated drug pricing would also spread the virus of rationing that threatens medical progress as we know it. Kill the market for a product by limiting access and you kill the incentive and rationale for research.

And less access to advanced medicines, not lower prices, is where we will end up if we emulate the policies of Canada and England that congressional price fixers and the Clinton administration so admire. Consumption, driven in part by the creation of health care entitlements and in part by better drugs and better medical practice, is what mainly drives drug costs up. And governments that try to control these costs end up denying people, usually the sickest and the oldest, access to the drugs that are most innovative and effective, on the grounds that these new treatments are "too expensive."

In Great Britain last October, the National Health Service refused to pay for the new flu treatment Relenza. In order to control health care costs, the government health czars have set up a board called the National Institute for Clinical Excellence (known, chillingly, as NICE) to decide whether to pay for new technologies as they emerge. It decided Relenza, which costs about $ 40 for a course of treatment, wasn't worth paying for and took the added step of discouraging doctors from prescribing it for patients who might have wanted to pay for it out of their own pocket. There were plenty of data that Relenza helped people who could be really rocked by the flu, but NICE argued that it needed more evidence -- the ultimate bureaucratic dodge.

The NICE board advised getting more people immunized, which is ironic: In a country where flu shots are provided free, only 40 percent of the public gets them on a regular basis. In any event, flu shots work about 70 percent of the time and are useless against new strains of influenza, which can be deadly for people with compromised immune systems. In the end, during Britain's flu epidemic this winter, hundreds of elderly people died and thousands of people with asthma, lung problems, or heart conditions waited for hours, even days, for relief, gasping on trolleys in overcrowded health care facilities. When the morgues were overwhelmed by the dead, the National Health Service had to rent refrigerated trucks, the kind used for hauling meat, for temporary storage. We can't know how much this toll might have been lowered by a $ 40 drug, but it's the sort of question price-controllers should be forced to confront.

Similarly, many of the drugs that Hillary Clinton says Americans should be allowed to re-import from Canada so as to save money are in fact not made available to that country's seniors under Canada's prescription drug plan. Thousands of Ontario seniors are being denied new treatments available in this country for osteoporosis, Alzheimer's, and Parkinson's disease. Indeed, a spokesperson for health minister Elizabeth Witmer has admitted that many of the drugs being kept off the formulary "have long-term benefits both for our budget and for patients."