Prescription drugs - how to control costs

Buzz sampling suggests that one area where bipartisan compromise may be sought is in the area of prescription drug prices. Given that the President did not exhibit a commitment to small government in getting his prescription drug benefit bill passed a couple of years ago, we need to seriously do something about how much those drugs cost us taxpayers.

As any of our Centerfield readers know, I am a strong advocate for free market health care solutions. I don't favor single-payer plans, I'm leery of forcing employers to provide health insurance to employees, and I think our current system combines the worst of both socialism and capitalism, giving us the benefits of neither. Please keep this background in mind as you read my proposed drug price solution.

Congress should pass a law that says:

No agency of the United States shall pay more for any prescription drug than the lowest price charged by the manufacturer or distributor of that drug to Canada, Japan, or any nation which is a member of the European Union, or to the central healthcare authority or provider of any such nation.

Republicans have opposed government negotiation of lower prices for drugs on the grounds that the drug companies must make a sufficient return on their investments to pay for the expensive (and risky) research and development necessary to provide new drugs. I certainly share that concern. While critics claim that "Big Pharma" spends more on advertising than on R&D, the simple fact is that developing new drugs is extremely expensive, particularly given the stringent safety and efficacy testing regimen required by the FDA. Thousands, if not tens of thousands, of candidate drugs must be tried out to find one successful treatment. So I support pharmaceutical companies and their need to make a profit.

The problem, though, is that current policy leads to U.S. consumers and taxpayers subsidizing drug research and development for the rest of the world. If drug makers can't continue their R&D efforts if the U.S. stops paying "list price", that means that they are not charging enough to the other countries to recoup their full costs. My solution forces the drug companies to adjust their prices to distribute its costs more fairly among all countries. It has the added benefit of not empowering a new layer of federal bureaucracy to determine what a "fair" price for a drug should be.

The practical effect of such a law, I suggest, would be a significant decrease in drug prices here and a slight increase in drug prices in other developed nations.