Originally created 07/05/99

Column: Price controls are wrong way to help seniors get the medicines they need



(Editor's note: The author, Alan F. Holmer, is president of the Pharmaceutical Research and Manufacturers of America.)

A SIGN over the counter of a print shop offers some good guidance on strengthening and improving Medicare to cover prescription drugs: "Price, Speed, Quality -- Pick Two." In other words, we need to set priorities about what we want in a Medicare drug benefit and to ask hard questions about whether the various proposals meet those goals.

In the words of Sen. John Breaux, D-La., co-chairman of the Bipartisan Commission on Medicare, "Prescription drugs are as important today as a hospital bed was in 1965." Today's seniors rely on modern medicines for high blood pressure, arthritis, Parkinson's disease, depression and other diseases to stay well and out of hospitals and nursing homes.

Pharmaceutical companies, which are currently developing more than 600 new medicines for diseases of aging, want seniors to have access to the benefits of this research. We want to be part of a solution that helps seniors and the disabled obtain the medicines they need, but we want to make sure that the "solution" doesn't end up causing an even bigger problem -- by discouraging the pharmaceutical research that all patients are counting on to discover new treatments and cures.

AS THE SIGN in the print shop indicates, quality doesn't come cheap. It costs an average of $500 million to research and develop just one new medicine. To attract the investment needed to fund this research, pharmaceutical companies need free market incentives. Some of the Medicare reform plans under consideration would substitute government-imposed price controls for free market competition.

Quite simply, price controls have never worked and have done a lot of harm. They caused deadly food shortages in ancient Rome. They starved Washington's troops at Valley Forge. And they prompted the long lines at gas stations of the 1970s. Price controls on prescription drugs would have literally life-threatening effects: They would discourage investment in research on cures for heart disease, cancer, stroke and other diseases that afflict seniors.

Quality will also suffer if we simply tack on an expensive drug benefit to the outmoded Medicare program, which is headed for bankruptcy. This massive, big-government program is riddled with over-regulation. Yet, despite the reams of rules, Medicare is rife with costly fraud and abuse. Adding a drug benefit to the current Medicare system would be like hitching a U-haul to a broken down jalopy. Seniors would be better served by a new, state-of-the-art vehicle.

The sign in the print shop also warns that speed comes at a price. In other words, beware the "quick fix." One bill under consideration in Congress, "The Prescription Drug Fairness for Seniors Act of 1999," is a shining example of "quick-fix" thinking that is penny-wise but pound-foolish. It would require manufacturers to sell drugs to pharmacies at the lowest price that pharmaceutical manufacturers are already compelled by law to give to specified federal departments.

THIS WOULD NOT solve the real problem -- lack of prescription drug coverage by more than one-third of seniors -- and it would cause an even bigger problem: It would put more than 40 percent of the U.S. pharmaceutical market under the iron grip of research-chilling price controls. This "quick fix" wouldn't fix anything, and could throw a monkey wrench into research on cures for diseases of aging.

Instead, let's give seniors the same high-quality care that members of Congress and millions of other working Americans enjoy. Under a plan endorsed by a majority of the Bipartisan Commission on Medicare, seniors would choose from among competing private-sector plans, and the government would pay the major part of the premium. To enroll and keep patients, private health plans would have economic incentives to provide high-quality health care, including access to the medicines the patient's doctor prescribes. Competition -- not government price controls -- would contain costs.

Pharmaceutical research has transformed old age into a richly rewarding period of life. Advances in medicine have turned disability into ability, empowering seniors to lead active, independent lives.

THERE'S NO question that expanding access to prescription drugs for seniors is an idea whose time has come. But it has to be done in a way that will preserve the incentives that will lead to better treatments and cures -- for seniors and for all of us.