The American Spectator

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Special Report

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Companies raise cash to spend on R&D by selling their products. That's why they advertise. That's why they hire salesmen and saleswomen. That's why they provide samples to doctors. The industry's goal is not to create fabulous products that sit in warehouses unknown and unused. The objective is to get people to buy drugs.

Of course, since pills are cheap to make, pharmaceutical prices seem excessive. Why pay a few bucks for something that costs a few cents to manufacture?

But the price of a drug is not just for the physical end product. It's for the research. And it's for the research on all of the compounds that didn't make it to market.

There are far more misses than hits. Even most successful medicines lose money. The few blockbusters are necessary to underwrite the entire R&D program.

THAT DOESN'T MEAN GOVERNMENT should prop up pharmaceutical prices. However, by the same token, politicians shouldn't try to artificially force prices down. The particular mechanism doesn't much matter. Whether explicit government price-setting, Medicare "negotiation," aka federal price controls, or "reimportation," really the importation of price controls rather than pharmaceuticals, the ultimate effect will be the same: less money for R&D.

There ain't no such thing as a free lunch, goes the saying. Forcibly lowering prices means there will be less product. Unfortunately, the perceived benefit, cheaper medicine, is obvious today. The downside, fewer beneficial pharmaceuticals, won't be felt until years from now, and even then it won't be obvious. A person will see any fall in the price of a drug that he takes. It is much harder for him to imagine the drugs that would have existed had pharmaceutical companies spent a little more money to develop new products.

Drugmakers are not beyond criticism, of course. But they should not be demonized. By any measure of social good, the pharmaceutical makers constitute one of America's most important industries. Their products save lives, heal diseases, and improve lives. Instead of targeting drug manufacturers, legislators should applaud them. Indeed, a political party that really cares for the sick, the disadvantaged, and the poor should appreciate the work of the pharmaceutical industry.

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