The Suffocation of Innovation: When the Left fights progress, fight back - prescription drug coverage and new drugs
A few years ago, I took part in a congressional hearing on prescription-drug coverage for seniors. During the hearing, Robert Reischauer -- the former director of the Congressional Budget Office and now a budget expert at the Urban Institute -- stated that "If you could tell me that we could design a health system in America that would provide coverage to everyone so we didn't have 34 million people uninsured, but the price of that would be that we would, in 1999, have to live with 1997 medicine, I would say, fine, as long as the 1997 medicine continued each year."
Is it really "fine" to impose that sort of bargain on Americans? Such proposals ignore the huge advances made in medicines and the improvements drugs have made in health care and human affairs generally.
Pharmaceutical innovation not only allows people with diseases to live longer (and indeed those suffering from AIDS, certain forms of cancer, or rare childhood disorders to live at all), it also reduces the cost of treating disease. As spending on prescription drugs has increased and the rate of consumption has quickened, the pace of spending on hospitals and physicians has actually slowed, even as research has given the sick longer life.
In 1960, Americans spent 10 percent of their health-care dollars on prescription drugs. Most of the money came out of their own pockets, and was spent on drugs that largely treated infections, heart disease, arthritis, and depression. Beyond that, there was little that science could offer. Today, the range of diseases for which medical research has some partial treatment is vast. Despite this change and the double- digit increase in drug spending -- 75 to 90 percent of which is picked up by insurance companies -- prescription drugs now account for only 9 percent of total health expenditures. Furthermore, according to economist Frank Lichtenberg, for each additional dollar spent on newer medicines, total health-care spending is reduced by $6.17.
But Reischauer would retard this progress and impede future innovation at a time when, more than ever, new medicines offer tremendous promise to ease the suffering of millions and reduce health-care costs significantly. His argument, and the claim of other enemies of medical progress, is that stern measures are required to ensure that new technologies are affordable.
To be sure, many people need help paying for medicines -- but they also need help paying for other things, too. No one suggests reducing the rate of innovation in other areas of enterprise -- agriculture or energy, for instance -- to make those goods affordable. No one suggests holding computer technology constant at the Pentium 4 processor. Yet American politicians are seriously considering implementing policies that would discourage breakthroughs in the future so as to achieve universal coverage of prescription drugs, coverage for a group of Americans (seniors) that is largely -- though not entirely -- healthy and wealthy.
The move to provide free or cheap drugs for seniors is really a Trojan horse for pushing a larger agenda. An unlikely alliance between corporations and socialist ideologues has emerged, dedicated to the principle that undermining the ability of private companies to develop and market new medicines is more important than eliminating disease. These enemies of medical progress include: insurance companies and large corporations that want more generic drugs and fewer new drugs, to fatten their bottom lines; journalists suspicious of the private sector; Ralph Nader's Public Citizen and other "consumer advocates"; Harvard University Public Health types, such as Arnold Relman and Marcia Angell, former editors of The New England Journal of Medicine; and AIDS activists, who believe that pharmaceutical patents prevent Africans with HIV from getting the drugs they need to live another day.
They would have you believe that government control over the price and use of medicines now and in the future is a good thing. But their policy prescriptions have resulted in suffering and death for those within their regulatory reach. In recent years, restricted access to new medicine, assaults on intellectual property, and price controls have done just that in Europe and, with increasing frequency, America. Europeans suffering from cancer, schizophrenia, diabetes, migraines, depression, asthma, or multiple sclerosis are less likely to receive the newest medicines than Americans with these same diseases -- thanks to the sort of restrictive drug lists and freezes on medical innovation proposed by the enemies of medical progress, in the name of universal coverage.
Once these policies undercut the market for new drugs, research declines. In Europe, pharmaceutical research-and-development spending declined 20 percent from 1990 to 1999, with most of the shift flowing into the United States. U.S.-based companies developed eight of the ten top-selling drugs of the past decade and have introduced the vast majority of biotech products. But not for long. Europe wants to liberalize prices for new drugs, speed up access to new medicines, and reward innovation through stronger patent protection. Here in America, we're doing just the opposite.
For the most part, the enemies of medical innovation want us to think that the pharmaceutical and biotech industries are useless. The National Institute for Healthcare Management (widely quoted but never outed as a front group for managed care) claims that the "pharmaceutical industry is not particularly innovative and it is growing less so each year." Just the opposite is true. The total number of drugs and biotech products getting orphan-drug (i.e., drugs for rare diseases), fast-track, priority, or accelerated-approval status has increased more than four-fold, from approximately 120 drugs in such categories in 1995 to about 500 in 2002.
At the same time, drug companies are shifting a lot of money and effort into new ways of developing drugs, portending a revolution that could save or extend the lives of millions around the world. Biotechnology- based drug development will allow drugs to be tailored to an individual or a select group of patients, avoiding major side effects. In the long term, we will begin to correlate more and more genes with particular diseases that define an individual's risk profile, which will in turn allow us to limit or avoid that risk, either by lifestyle modification or therapeutic intervention.
But don't get your hopes up. The enemies of medical progress are busy devising ways to discourage the use and development of new drugs. The MaineRx program is a case in point. Maine wants to force drug prices down for everyone in the state -- regardless of income or need -- by refusing to pay for new medicines except at the Medicaid price. Sen. Olympia Snowe calls this a victory for consumers.
Let's see: A new drug may allow doctors to treat pancreatic cancer in a way that prolongs a patient's life with fewer negative side effects than an old drug, but if it costs more than the price set by the government, the doctor won't prescribe it, since there is no guarantee that he will get reimbursed for prescribing it. Doctors will end up prescribing older and cheaper drugs regardless of whether newer and better ones exist. Quite a triumph, Senator.
Price controls are gaining momentum outside of Maine. Medicaid and the Department of Veterans Affairs already restrict access to new medicines. The Bush administration has proposed reimbursing the newest cancer treatments at the price of older, generic drugs -- in short, reimbursing tomorrow's drugs at yesterday's prices. Why would a pharmaceutical company risk developing a breakthrough drug when government-established drug lists are likely to keep the products from patients? Indeed, why do so when politicians and activists want to allow generic companies to make cheap copies of your products? And anyway, where will the money for future cures come from if we are just consuming increasingly older medicines?
AIDS activists want you to believe that if you strip products of patent protection, let generic companies make them cheaply, and sell them to HIV-infected Africans at prices they can afford, AIDS will be eliminated. This idea is alluring. But there are almost no patents on drugs for HIV, malaria, or tuberculosis in Africa, for example, and generic firms have not rushed to manufacture or import products, because of a lack of profit opportunities. By the same token, India's HIV infection rate is rising rapidly despite the presence of hundreds of generic drug firms, weak patent protection, and cheap HIV drugs.