Another Attack On Big Drugmakers

Health Care: Powerful California Rep. Henry Waxman wants to save Medicare billions by going after drug industry “windfalls.” As usual, his “savings” will very quickly turn into higher costs for you-know-who.

So many industries, so little time — that might be the Democrats’ motto. By demonizing the drugmakers, Waxman and his allies in Congress hope to convince you they’re doing something about rampant cost increases in Medicare.

They’re right that Medicare costs have risen rapidly. Indeed, since 1970 Medicare’s costs have risen 34% faster per patient than overall medical costs.

To us, that’s just another reason for not trusting our medical system to the government in the first place.

But that hasn’t stopped Waxman, who heads the House Energy and Commerce Committee and is widely seen as the most influential player in health care overhaul in the House.

Waxman’s proposal to go after drugmakers to trim Medicare costs is wrong on many levels. For one, it’ll shift costs onto those with private insurance. For another, it’ll make all of us less healthy by forcing drugmakers to abandon or delay development of new drugs.

Recall that just a few months ago, drugmakers were forced to swallow a “deal” with the White House to cut $80 billion from the cost of drugs over 10 years. They did so reluctantly, knowing full well they’d be politically demonized and attacked if they didn’t.

Despite that good-faith effort, Waxman says it’s not enough. He claims the industry is the recipient of a $3.7 billion “windfall” — or $30 billion over 10 years — due to new drug benefits that were added to Medicare in 2006. Those changes added 6.4 million people to Medicare’s rolls who were previously on Medicaid.

And since the Medicare Part D program — the drug program — doesn’t let the government negotiate lower prices with drugmakers, while Medicaid does, these new enrollees cost the government more. Waxman thinks America’s drugmakers should make up the difference.

This is par for the course for members of Congress. They think they can impose whatever costs they want on an industry, with no real-world impact.

For the record, drugmakers are largely responsible for the lengthening of lives worldwide. From 1986 to 2000, according to a recent study of 56 countries, life spans grew by nearly two years. That study by a Columbia University researcher found that 40% of the gain was due to new drugs.

In the U.S., average life spans for women jumped from 74.7 years in 1970 to 80.4 in 2005. For men, it leapt from 67.1 years to 75.2. Drug company research creates blockbuster medicines for dreaded diseases such as cancer, stroke, HIV, heart disease, Alzheimer’s and lupus. In other words, the drugs help us live longer and better lives.

Yet few Americans realize what goes into making a successful drug. Of every 5,000 to 10,000 new compounds investigated, only about five make it through the lengthy process and will be sold to the public.

This process takes 10 to 15 years on average, data from the Pharmaceutical Manufacturers’ Association show. The cost, according to research from Tufts University, is $1.3 billion per drug. And only two of every 10 drugs that make it to the market recoup even their R&D costs.

The point is, it’s very costly to make people well. In 2007, spending on drugs reached $286.5 billion. As Sally Pipes, president of the Pacific Research Institute, notes in her book “The Top Ten Myths of American Health Care,” that’s bigger than Ireland’s entire GDP.

To keep up the innovation and research, drugmakers need big profits. That’s how they attract more investment, and how you benefit. Those who applaud as Congress goes after a successful industry that improves all our lives should be ashamed of themselves.

Every dollar Waxman takes from a drug company today will cost lives tomorrow. As for those who blame drug costs for soaring Medicare costs, it just isn’t true. Prescription drugs account for just 10% of U.S. medical spending. Yet, dollar for dollar, they arguably have the greatest impact on our health.

Waxman and the other health care control freaks in Congress would like nothing more than to dictate the prices you pay for drugs. Ultimately, that will lead to rationing and higher drug costs — not to mention fewer life-saving drugs on the market.

Waxman claims he’ll “save” you money. But can he save your life? America’s drug companies, the best in the world, can. Quit going after them.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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