The Public Policy

The World of David Catania

In it all drugs are free and pharmaceutical companies have all the stature of tobacco growers.

By 11.28.05

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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.

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About the Author
Doug Bandow is a senior fellow at the Cato Institute. A former Special Assistant to President Ronald Reagan, he is the author and editor of several books, including The Politics of Plunder: Misgovernment in Washington (Transaction).