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Cheaper Drugs Would Come at a Steep Price
Cheaper Drugs Would Come at a Steep Price
Chicago Sun-Times
By Peter Pitts
Jan 13,2007
U.S. Rep. Rahm Emanuel (D-Ill.) has announced legislation "aimed at driving down the price of prescription drugs." But the only thing such legislation would actually drive down is pharmaceutical innovation.
The legislation -- euphemistically called the Pharmaceutical Market Access and Drug Safety Act -- will be co-sponsored in the House of Representatives by Jo Ann Emerson (R-Mo.) and in the Senate by Byron Dorgan (D-N.D.) and Olympia Snowe (R-Me.).
Along with several allies, these lawmakers have long called for the legalization of drug importation. According to the bill's sponsors, their legislation would ''allow American consumers, pharmacists and wholesalers access to Food and Drug Administration-approved prescription drugs at world market prices."
Emanuel and his congressional colleagues may come from different states, but if they truly believe that "world prices" can become "American prices" with the stroke of a pen, then they're living on a different planet. After all, there aren't "world prices" for hotel rooms and airplane tickets or Big Macs or automobiles. Aside from basic commodities such as oil and gold, there isn't a world price for anything.
Drugs are cheaper in the European Union and Canada because of "reference pricing," a system by which foreign governments average the drug prices of several developed nations and then mandate that price. The proposed bill would allow American pharmacies to import drugs from countries that employ reference pricing.
Although that system appeals to the notion of fairness, the only reason these nations can get away with reference pricing is because they threaten to violate patent rights if the world's pharmaceutical companies refuse to sell to them.
So while these nations claim to ''negotiate'' drug prices, it's more of a shakedown. If these companies refuse to do business, their products will simply be stolen.
But who cares, right? If the Europeans and Canadians can dictate prices, why shouldn't we? The answer is straightforward: The prices Americans pay for medicine fuel global research and development. The rest of the world gets a free ride, and U.S. consumers get stuck with the bill. It's not fair, just or sustainable, but it's a fact. And the rest of the world doesn't even thank us.
So what would happen if these lawmakers succeeded? Without the money to fund research and redevelopment, pharmaceutical innovation would grind to a halt.
Last week, for example, the Government Accountability Office reported that the pharmaceutical industry spent $60 billion on research and development in 2004, a 147 percent increase from 1993. At the same time, the number of new drug applications to the FDA grew by only 38 percent, and only one-third of those drugs were particularly innovative.
What Emanuel and his allies don't realize is that as we learn more about the human genome, drug development is becoming more complex and complicated than ever before. That's why the average drug costs nearly $1 billion to develop. And sometimes, that research and development is futile. Late last year, for instance, Pfizer decided to halt clinical trials on torcetrapib, its latest cholesterol-lowering drug. The company had spent about $800 million on its development.
Further, thanks largely to the effect of pharmaceutical products, the average American life span has increased by a full decade over the past 50 years. Unfortunately, few lawmakers are willing to point that out.
Instead, most seem bent on making a fool's trade of epic proportions: Giving up tomorrow's cures for today's ''world prices.''
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