As the 110th Congress convenes, there’s no end to the handwringing over prescription drug prices, particularly among Democratic leaders, who are now clamoring to impose price-controls on the pharmaceutical industry. But can our politicians use the power of the state to lower the price of drugs without doing more harm than good?

The answer is a resounding “no.”

Every year, we hear that prescription drugs are eating up a greater share of health care spending. Having hovered between 5 and 8 percent of overall health costs for about 20 years until the mid-1990s, pharmaceutical spending has steadily climbed past 10 percent over the last decade. Critics often point to this as proof that “something” needs to be done – but the measurement is meaningless.

First, the percentage of overall healthcare expenditures spent on prescription drugs is simply a ratio, which we shouldn’t expect to remain constant.

For example, if we were to look at the history of artificial light in the United States, wood, oil, and candles would account for virtually all spending until the last quarter of the 19th century, when electricity quickly rose from zero to virtually 100 percent.

If turn-of-the-century politicians had insisted that only 8 percent of total artificial light expenditures be allocated to electricity, we’d be living in the dark today.

Second, identifying prescription drugs as a percent-component of health care spending tells us nothing about how that spending contributes to our health. So we cannot judge whether the money is well spent.

For instance, a person with high cholesterol may be admitted to the hospital for acute treatment of coronary heart disease, where a stent is installed to open his arteries, and a daily cholesterol-lowering drug is prescribed. If the drug accounted for 15 percent of his total health care expenses, does that mean that the money could have been better spent on additional X-rays?

Of course not. It would be unethical, if not criminal, for a doctor to focus exclusively on reducing drug costs. In fact, expensive prescription medicines often substitute for even more expensive hospital interventions. Looking at data from 1996 through 1998, Columbia University’s Frank Lichtenberg found that people who use newer prescription drugs are healthier – and live longer – than those using older cheaper drugs for the same condition.

Yet prescription drugs are such an easy target for the nation’s politicians because of Medicaid. As the nation’s largest health care program, Medicaid cares for nearly 60 million beneficiaries and spends more than $30 billion dollars on drugs each year.

But given Lichtenberg’s conclusions, concern over Medicaid’s costs ought to focus on whether it is spending enough on prescription drugs. In the private sector, prescription costs make up a somewhat higher share of health costs than in Medicaid – and those payers have better incentives to decide price and quality.

Barring best-in-class drugs is penny wise, pound foolish. Pharmacy benefit managers in the private sector recognize this. That’s why they’re far more willing to “pay up” for costly prescriptions. They recognize that it’s cheaper to keep people healthy and out of the hospital. Indeed, today’s largest private health insurer doesn’t use preferred drug lists.

Unfortunately, state Medicaid directors have done just the opposite. In a misguided attempt to save money, they’ve relied on preferred drug lists to limit a physician’s ability to prescribe newer drugs. In recent years, these lists have become progressively more restrictive. In an increasing number of states, restrictive lists prohibit doctors from prescribing innovative drugs that keep health costs down by making them try other drugs first, jumping through hoops, and getting permission from government agents for each prescription.

Ironically, the government created the drug-price problem in the first place by mandating that drug makers give steep discounts to – surprise, surprise – the government.

Bizarre pharmaceutical pricing rules instituted over a decade ago, which were designed to give government programs the best prices, have caused prices to go up for the rest of us. Price controls have distorted the drug market, just as they would distort any other industry. It is actually illegal for drug makers to give discounts to uninsured patients without the state’s permission. Instead of creating competition, the government’s pharmaceutical price regime has only created confusion and conflict that does nothing for patients.

Furthermore, the University of Connecticut’s Center for Healthcare and Insurance Studies found that, since 1960, government intrusion in drug pricing has slowed down spending on research and development by $188 billion. The unseen cost of this government interference has been a loss of 140 million life years due to “undeveloped” medicines that would have resulted from lost R&D money.

Unfortunately, our nation’s lawmakers have found that it’s easier to grandstand about high pharmaceutical prices than grapple with the fact that government price regulations are one of the causes.

So what have they really accomplished?

For drug manufacturers – less incentive for research and development. For us – worse health outcomes.

Politicians may be able to score votes by railing against high drug prices, but their demagoguery carries real consequences.