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Democrats and the drug scam

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POSTED: February 20, 2007 5:06 a.m.

Democrats hate that Republicans are willing, on the issue of embryonic stem-cell research, to let their straitened moral views supposedly stand in the way of medical progress. But Democrats have their own ethical problem with medical progress — based on their moral qualms about the profit motive.
During the 2006 campaign, Democrats argued that President Bush’s prescription-drug program — Medicare Part D — could never be cost-effective unless the government was allowed to negotiate directly with drug companies.
According to the Democrats, the “D” in Medicare “Part D” stood for “dystopia,” forcing dazed and confused seniors to be ripped off by ravenous drug companies.
In reality, the absence of government negotiations has been key to the program’s success. Private health plans negotiate drug prices with the drug companies and then offer a menu — a formulary — of covered drugs through Medicare.
Seniors choose among the various plans, picking the one with the drugs they want at the best price.
According to the Centers for Medicare and Medicaid Services, the robust competition has meant that premiums for the basic drug benefit average $22 per month, 40 percent less than had been projected.
Seniors are estimated to be saving, on average, $1,200 a year on drugs, and 80 percent of seniors enrolled in the program are satisfied with it.
As it happens, government negotiations of prices won’t do any good unless the government is empowered not to offer certain drugs, thus achieving real bargaining power.
This would require creating a national formulary — in other words limiting the drugs available to seniors in the Medicare program.
The Department of Veterans Affairs — touted by Democrats as an ideal example of government negotiations — has just such a formulary. If the latest drug isn’t on the VA list — well, there are always old drugs. Columbia University professor Frank Lichtenberg reports that “only 38 percent of drugs approved in the 1990s and 19 percent of the drugs approved by the FDA since 2000 are on the VA National Formulary.”
Democrats don’t want to impose a formulary on Medicare Part D because they know that it will cause a revolt. So their negotiation scheme, passed by the House last month, has no chance of lowering prices. At least Democrats will have struck a symbolic blow against profits.
They used to complain that drug companies made too many “me-too drugs,” but the variety of drugs available to treat the same conditions has created healthy competition regarding price.
Now Democrats complain about one-of-a-kind breakthrough drugs, where there isn’t (yet) such competition.
But drug research is risky and hideously expensive. No one will do it without the benefit of profits. When Pfizer’s new cholesterol-lowering drug proved a failure late last year, it lost 15 years and $1 billion in research and development costs.
If Democrats continue crusading against drug-industry profits, they will succeed only in obstructing medical progress, to the detriment of seniors and all of us.

Lowry is editor of the National Review.

 

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