President Clinton's Medicare drug proposals would be the beginning of the end of quality health care for the elderly. Mr. Clinton's plan would result in price controls and rationing, and it would slow, and eventually stop, the development of new drugs.
Mr. Clinton, Hillary, and HHS Secretary Donna Shalala all deny this. But how would they know? Who is there in the Clinton administration to tell them?
What Mr. Clinton is doing is trying to block a tax cut by saying the alternative use of the money is a drug prescription giveaway to the elderly.
Mr. Clinton's proposal will result in price controls, because it would divide the country into regions and award contracts for administering the drug program. Various entities - HMOs, drug chains - would bid for the contract.
Cost, of course, would be a factor in the bids. In competing for the contract, bidders would devise ways in which drug coverage would be restricted to prevent open-ended costs.
There is no way that this can be done except by limiting payments for drugs
and by restricting patients' access to medicines.
Squeezing drug prices helps the bureaucrats administering the program stay within budget. But squeezing the pharmaceutical companies would jeopardize the expensive research required to develop life-enhancing medicines.
Bureaucrats and "consumer activists" often complain that the price of a particular drug is far above the cost of producing it once it is in production. This is very often the case. But it does not mean that drug companies are ripping off patients or Medicare.
It costs a lot to develop new medicines. Many don't pan out, and the ones that do must go through lengthy trials and Food and Drug Administration approval procedures. The medicines that do pan out have to carry the costs of the failures and the federal regulation as well as their own production costs. Otherwise, the efforts of pharmaceutical companies to develop new medicines will result in losses. It is much safer to concentrate on producing and improving existing products.
Squeezing prices paid to pharmaceutical companies squeezes their profits and ability to carry on the development of new medicines. This is not what we want.
When medicines are supplied free or at subsidized prices, the demand increases. …