Warning: Sen. Ted Kennedy’s prescription to “fix” Medicare Part D with cheap, government-approved drugs may cause dangerous side effects, including outdated medicine, stifled research and reduced life expectancy for Medicare recipients.

Kennedy (D-Mass.) has denounced the new prescription-drug benefit because it “prohibited Medicare from negotiating the same discounts that the VA gets for veterans.” He is touting his own plan, which is modeled after the Veterans Affairs benefit, giving the government control over drug pricing. “The funds saved by ending unfair prohibition will be used to provide a better drug benefit,” he proclaims.

Give me a break.

The VA provides an important service, but it is rarely held up as a model for providing cutting-edge medicine, with good reason. The new Medicare benefit ensures access to virtually any Food and Drug Administration (FDA)-approved medicine. On the other hand, the VA drug formulary, which determines the medicines available to veterans, is extremely restricted.

Only 19 percent of drugs approved by the FDA since 2000 are listed on the VA formulary. Only 38 percent of drugs approved in the 1990s are listed. For example, the top-selling drug Lipitor, a statin that lowers the risk of heart attack and stroke, is not on the VA list.

Similar cholesterol-lowering statins are on the formulary, and Kennedy would likely suggest directing patients to one of them. But one size really doesn’t fit all. Patients react to different drug variations in different ways.

Lipitor, moreover, is the one size that would fit most. Clinical trials have shown it to be best in its class at reducing death rates.

This is what happens when a single buyer must meet the needs of 4 million people. The buyer, in this case the VA, tries to control costs, and some needs don’t get met. Now Kennedy wants to apply this same system to the nearly 40 million Americans who rely on Medicare.

Why? Kennedy argues that if Medicare acted as sole middleman between pharmaceutical companies and the senior citizens who buy their products it could wrangle dirt-cheap prices for all. He claims that this is what the VA does — uses its size to negotiate bulk discounts — and that if the VA can do it Medicare can too.

The senator is wrong. The VA’s negotiating power comes from the federal government’s forcing drug makers to sell to the VA before they sell to other government programs, like Medicaid, which dwarf the VA in size. These government agencies control the bulk of the U.S. prescription-drug market.

Since the 4 million veterans who benefit from VA services make up a small market, drug companies can absorb the cost of the VA discount. Extending the same below-market rate to 40 million Medicare beneficiaries would be a radically different proposition.

Medicare accounts for about 40 percent of all U.S. drug spending. With its enormous purchasing demands — and backed by the overwhelming financial and regulatory power of the federal government — Medicare would simply dictate prices, distorting drug markets on an unprecedented level.

Let’s look at what would happen under a VA-style system of Medicare price controls. Pharmaceutical makers would take a big hit to their bottom lines.

In Kennedy’s economic fantasyland, that doesn’t matter because drug companies have infinite profit margins. No matter how much we squeeze profits, this magical theory says, the companies will keep on inventing and making the medicines we clamor for.

That’s simply not true. It costs a company about $800 million to develop a new drug and see it through the FDA approval bureaucracy. If companies cannot sell at a price that covers costs and turns a profit, they will stop inventing new drugs.

Government intervention has already choked off drug innovation virtually everywhere else. That is why people the world over use cancer and AIDS medications invented in the United States. If we mandate price controls here, more lifesaving breakthroughs will be lost.

In addition to shutting off the path to future scientific advance, national price controls could hurt patients right now. In his new study “Older Drugs, Shorter Lives?” Columbia Business School professor Frank Lichtenberg found that the VA formulary may be having a negative impact on veterans’ life expectancy.

In the six years before the formulary was introduced in 1997, both overall U.S. male life expectancy and veterans’ life expectancy increased significantly. From 1997 to 2002, though, while overall U.S. male life expectancy continued to rise, growth in veterans’ life expectancy came to a halt.

Instead of mandating nationwide price controls, the new Medicare drug benefit creates competition among numerous private drug insurers, which are jostling to offer consumers the best prices and cost-benefit combinations.

The Medicare drug plan is far from perfect, but at least it hasn’t resulted in price controls and rationing of drugs. Unlike with the VA system, seniors have access to virtually any medicine, however cutting edge.

Instead of trying to force America’s seniors into the VA’s pharmaceutical straightjacket, Sen. Kennedy should be advocating for change in the VA system so that our veterans can get the precise medicines they need.