The Right Prescription: Less Government
There are important deregulation efforts afoot that will help lower prescription-drug prices.
Here’s a bit of good news as we head into the Christmas season. Last week, the Food and Drug Administration withdrew a rule that would have put patients’ health at risk and made it more expensive to buy medicine.
As a Wall Street Journal editorial recently stated, “[The] rule proposed by the Obama Administration in 2013 allowed generic drug makers to tailor their own safety labels, which historically must be identical to the branded product. The rule’s biggest supporter was the plaintiffs bar, which figured this would open up more opportunities for lawsuits for failing to warn consumers about all and sundry risks. The practical effect would be to make drug labels even more incomprehensible than they are now, varying among products that are chemically identical.”
Not only would patients face possible health risks due to the confusion over labels, but generic drug prices would also have increased nationwide more than $4 billion. And this cost would likely increase once litigation costs were passed onto consumers.
Again, this is what happens when government meddles with the free market.
President Donald Trump vowed during his 2016 presidential campaign to make patients’ access to medicine more affordable. Since then, he’s been a consistent critic of Big Pharma, but his record is mixed.
On one hand, Trump’s goal is to make prescription drugs more affordable. The Journal reports, “The FDA has over 20 months of the Trump Administration approved an astounding 1,617 generic drugs, which are identical to branded versions but sold at commodity prices after patents expire. That works out to 81 a month on average — an 17% increase over the preceding 20 months. The Council of Economic Advisers in October tried to tally the savings from new entrants: $26 billion.”
On the other hand, Trump’s intervention in the free market is backfiring, as some companies have raised their prices in response to discounted drugs in an effort to retain profits.
According to The Resurgent, Pfizer will “raise the prices of 41 drugs in January, amid escalating Trump administration efforts to lower prescription drug prices and months after Trump’s intervention forced the largest U.S. drugmaker to postpone planned cost increases.”
There’s plenty of blame to go around on this issue. Democrats want to set up an agency that would have broad power to investigate and punish drug companies that don’t fall in line with their goal of government-run health care. Think “Consumer Financial Protection Bureau” for prescription drugs, and you’ll understand why it’s a bad idea. Meanwhile, President Trump wants to impose European-style price controls on Big Pharma.
While the Trump administration may be toying around too much with the free market, Democrat Sen. Elizabeth Warren is going even further by proposing more government intervention masked as a free-market solution.
The Daily Signal reports, “The Affordable Drug Manufacturing Act seeks to address the increasing prices of prescription drugs by injecting competition into the marketplace, consequently lowering the cost of mass-produced generic drugs. The bill would create the Office of Drug Manufacturing, which would be housed within the Department of Health and Human Services.” Additionally, “The Office of Drug Manufacturing would be tasked with producing drugs in cases where the market has been deemed to have failed.” Warren claims that the program would be “self-sustaining,” but that’s a promise that might be harder to keep than Barack Obama’s notorious “you can keep your doctor” whopper.
In both cases, the free market loses and Americans end up paying more for health care that’s increasingly controlled by government bureaucrats. In the end, the only system that really works is to leave the markets alone rather than embracing Europe’s path to government health care.
As The Wall Street Journal reminds us, “For all the talk of wondrous European health-care systems, the American generics system is the envy of the world. Nine in 10 prescriptions in the U.S. are cheaper generics, which saved $265 billion last year. Compare that with 70% in Canada and less than half in many European countries. The U.S. pays big for breakthroughs but eventually prices fall as competition arrives. Europe enjoys less price discipline.”
As always, it’s amazing what the free market can do when the government gets out of the way.