Many Americans live in the world as it ought to be. We all ought
to be millionaires. We all ought to have top-paying jobs. We all
ought to be driving Rolls Royces and sailing yachts. To make that
world happen people turn to politicians. If you don’t want to pay
what something costs, by working to earn the necessary funds or
sacrificing current consumption to invest for the future, ask
government to take the money from someone else.
Washington long has been known as the city of the world as it
ought to be. Congress legislates, mandates, and regulates
irrespective of reality. Pious politicians promise the world even
as their grandiose programs run aground on reality.
Now the Washington, D.C. Council has followed in Congress’s
unfortunate footsteps. Prescription drugs provide great benefits.
They ought to be free, or almost so. Why should anyone have to pay
for them?
Argues Council member David Catania, author of new price control
legislation: the measure will “contribute to more people having
access to essential prescriptions, employers being better able to
afford coverage for their employees and the District providing
health services to underserved populations.” Amazing what one can
achieve by simply ordering prices to fall.
Never mind that companies raise money in the capital markets,
build expensive laboratories, hire knowledgeable scientists, and
invest billions to find elusive medical cures. Drugs cost too much
and the D.C. legislators — who, unlike the drugmakers, produce
nothing tangible or worthwhile — will take charge.
Months ago councilman Catania came up with a weird scheme to
seize drug patents, apparently forgetting that the U.S.
Constitution mandates that compensation be paid when exercising
eminent domain. He reluctantly scrapped that idea when he realized
that the Council couldn’t get away with grand larceny of this
sort.
Catania regrouped and offered new legislation to ban the sale of
pharmaceuticals at an “excessive price,” defined as 30 percent
above the cost in Australia, Britain, Canada, or Germany. It’s
surprising that he didn’t toss in Congo, Laos, and Mexico.
“We are not setting or fixing a price,” claims Catania. But he
conveniently chose as as his standard countries that impose price
controls. In short, Catania, chairman of the council’s health
committee, decided to find another way to steal the drugmakers’
products. He expects investors to continue providing funds and
companies to continue risking those funds even as irresponsible
election-minded politicians can judge prices and impose sanctions
on companies that charge “excessive” rates.
For firms determined to recoup their development costs by
charging market prices, the bill would impose civil penalties. For
D.C. politicians, it would be the next best thing to seizing
patents.
But Catania recognized that the drugmakers aren’t likely to
meekly surrender their wares. Before the bill’s passage, he
complained: “The pharmaceutical industry, just like the tobacco
industry, rather than obey the law, will file lawsuits.” And the
drugmakers have so far filed two suits to prevent the legislation,
signed into law by Mayor Anthony Williams, from taking effect.
Catania, once one of the more sober-minded members of the D.C.
Council, now flashes a demagogic impulse. Cigarette companies make
a product that kills people. Pharmaceutical companies make a
product that saves people. Most people would think there was an
important difference.
LET’S BE CLEAR. PEOPLE WITH heart conditions are alive today
because of the drugmakers. People with AIDS are living normal lives
because of Big Pharma. People with cancer are being cured because
of pharmaceutical firms. A new vaccine against cervical cancer is
moving towards the market. People with a range of ailments, big and
small, are surviving and thriving because a profit-making industry
is investing tens of billions of dollars annually in medical
research. But companies do so in expectation that they will be able
to recoup that investment.
David Catania thinks that is unreasonable. Apparently it is okay
to pay for quality hospitals and practiced surgeons. But spend
money on drugs?
Surely those little pills aren’t worth much. So what if Taxol or
Gleevec can stop deadly cancer in its tracks? Who cares if scores
of anti-retrovirals have emerged to hold back HIV/AIDS? Why cheer
when a company produces a remedy for avian flu or a vaccine to
prevent cervical cancer? The politicians on the Council believe
that drugs should be cheap.
Unfortunately, the price for every pharmaceutical on the market
has to pay for not only the production but the research. And not
just the research on the successful pills but also on the far more
numerous failures.
Medical research is a world full of misses, empties, and
almosts. On average companies have to review between 5,000 and
10,000 substances for every drug on the market. It ain’t easy,
especially compared to the ease with which politicians make
ignorant but vote-getting pronouncements.
The fact that Australia, Canada, and Europe leech off of
American R&D by imposing price controls on U.S. drugs sold in
their markets doesn’t excuse Washington’s City Council for trying
to do the same. And it isn’t possible.
The unfortunate reality is that importing foreign-controlled
prices will discourage companies from investing. Catania’s
constituents might get cheaper drugs today, but they will have
fewer effective drugs tomorrow. If the U.S. imposes price controls,
there no longer will be a market upon which anyone can leech.
If the bill survives court challenge, the drugmakers need to
adopt a simple stance: no drugs sold in the District. If people
want high quality medical products and services, they must pay for
them. If they won’t pay for them, they need to look elsewhere for
health care. Maybe David Catania and his colleagues will switch
jobs and make medicine for the sick.
What is most disappointing about Catania’s misguided campaign
for a free lunch is not that he’s trying to win votes with a
demagogic attack on an industry that provides medical miracles to
his constituents. It is that his constituents apparently believe
that they can get something for nothing.
Yes, the world as it ought to be is a wonderful place. But it
doesn’t exist. As Mr. Catania and his constituents, ultimately
along with the rest of us, will pay the price if the bill survives
the ongoing court battles.
