The Republican Drug Plan: A Prescription for Less Freedom and Higher Costs

by Richard E. Ralston

July 7, 2003

Contact: Richard E. Ralston, Executive Director

Mobile Tel: (949) 500-6829

E-Mail: richard@afcm.org

The Bush Administration and Congressional Republicans are advocating new drug benefit plans that will replace free choice with government controls. Instead of making their own decisions about the best medications, patients and their doctors will be reduced to seeking permission to use what the government decides to provide. This can only result in what government supplied health care has always produced in the U.S. and elsewhere: shortages, rationing, waiting lists, higher taxes, lower quality, less research and fewer new drugs.

House and Senate Republicans have approved plans last that would provide prescription drugs at a cost of $400 billion over 10 years. The stated reason for the plan is to provide Americans with medicines they could not otherwise afford. The Republicans don't ask why drugs are out of the reach of so many customers. They merely proceed on the immoral premise that everyone has a right to medicine, which entails that some people have a right to force other people to supply them with drugs. Citizens who think that they should not be responsible for paying for their own prescription drugs will find, after these proposals become law, that they are now responsible for paying for everyone else's prescription drugs.

Higher costs will be the result of enacting these prescription drug plans, based on the established track record of government involvement with health care:

1. Foreign government experience: Government provided health care in other countries has not been able to deliver more and better health care. On December 1 the Sunday Times of London reported: Labour has poured billions into health care since coming to power and has pledged 40 billion pounds more over the next three years. But the [National Health Service] is a greedy dinosaur of a service that swallows all the funds it is fed without demonstrating any increase in output. One example cited was that after spending an additional 280 million pounds on cancer treatment beginning in the year 2000, two-thirds of newly diagnosed cancer victims still have to wait over a month for radiotherapy to begin. But such failures are irrelevant to governments driven by the principle that those who are able to produce things of great value have a duty to provide those things to anyone who wants them. On November 29 the Financial Times reported on a Canadian government proposal for a huge new infusion of government cash due to growing concerns about the quality of health care and lengthening waiting lists for treatment.

2. The American experience is no better. Medicare, which cost $3 billion a year in 1967 costs $250 billion today and, according to the Congressional Budget Office, will cost $474 billion a year by 2012 without any new prescription benefits.

3. Government inability to control any expenses: NASA sold the International Space Station to Congress in the early 1980's at a projected cost of $8 billion. So far the bill is $100 billion, and it's not finished yet. The idea that government involvement will reduce the cost of the development of anything as complicated and high-tech as life-saving drugs is ludicrous. The government, as Americans well know, cannot even control the cost of postage.

Rather than reduce the cost of drugs, like all government medical plans the new program will just add more of the poison that created the disease. Rigid controls and the vast bureaucracies of Medicare and the FDA already add billions of dollars to the cost of drugs. This, not the market place, is responsible for the current high cost of drugs. New government programs and benefits will further explode drug costs and result in rationing, restrictions, regulations, less research, and fewer drugs. Adding yet more federal bureaucracy to administer another program will just layer on more expense.

Fewer choices and less freedom for patients will be another primary result of these plans. If the Republican plan forces more Americans into managed care it will eliminate free choice for more than just prescription drugs. It will reduce all of the health care options for those who take this route.

Fewer new drugs will become available as a consequence of these plans. When the government is surprised after the escalation in drug costs that result from a plan that promises to pay all of the bills, it will inevitably proceed to price controls and other new restrictions on drug companies. These additional controls on price will create uncertainty and destroy market incentives needed by the pharmaceutical companies to undertake the huge investments and risks need to develop new and better drugs. Drugs that never come into existence will not be too expensive to buy, but the result will be a price in unrelieved pain and uncured diseases. The wonders and break-throughs achieved in recent decades by America's Pharmaceutical industry will gradually become a thing of the past.

If the government really cares about the cost of drugs, it can stop taxing the dollars that citizens spend on their own health care costs and open the door to unrestricted medical savings accounts (MSA). Citizens spending their own dollars on medications will always spend them more wisely and prudently than the government.

If the government really cares about the availability of medicine, it can start decreasing rather than increasing controls over the pharmaceutical industry. What the government really needs to expand is not government, but freedom: a free market that encourages drug companies to develop competing new drugs. Free markets and MSA's will provide patients and physicians with better drugs at a more reasonable cost than the heavy hand of government.

When offered this new benefit, Americans concerned about the cost of drugs and their own health need to reply: No thanks.

Richard E. Ralston is Executive Director of Americans for Free Choice in Medicine.