The Health of America, Part 9

Tevi Troy--former Deputy Secretary of the Department of Health and Human Services, and prior to that, staffer for Senator John Ashcroft--writes about pharmaceutical regulation in the June 1st Wall Street Journal:

The conduct of the businesses that had been responsible for almost every medical innovation from which Americans and the world had benefited for decades became intensely controversial in the 1990s. An odd inversion came into play. Since the work they did was life-saving or life-enhancing, it was not deemed by a certain liberal mindset to be of special value, worth the expense. Rather, medical treatment came to be considered a human right to which universal access was required without regard to cost. Because people needed these goods so much, it was unscrupulous or greedy to involve the profit principle in them. What mattered most was equity. Consumers of health care should not have to be subject to market forces.

And not only that. Since pharmaceuticals and biologics are powerful things that can do great harm if they are misused or misapplied, the companies that made them found themselves under assault for injuries they might have caused. It was little considered that the drugs had been approved for use by a federal agency that imposed the world's most rigorous standards, and was often criticized for holding up promising treatments (especially for AIDS). Juries were convinced that companies had behaved with reckless disregard for the health of consumers, and hit them with enormous punitive damages claims. . .

The second came in response to the approval by the FDA in 1997 of direct consumer advertising of pharmaceuticals. The marketing explosion that followed it gave people the sense that these companies were not doing life-saving work but were rather engaged in the sale of relative trivialities, like Viagra and Rogaine, on which they had advertising dollars to burn that would be better spent on lowering the cost of drugs. And the third element of this mix was the rise of the Internet, which gave Americans a level of price transparency that they had not had before regarding cost differentials between drugs sold in the U.S. versus Canada and other Western countries. . .

A cultural shift had taken place. Pharmaceutical manufacturers, once the leading lights of American industry, had become a collective national villain.

The life sciences are among the most regulated areas of our economy, and are constantly subjected to significant policy upheaval from Washington. Because these products are so expensive to develop, the regulatory and policy whims of Washington tend to have a disproportionate impact on investment in the industry. Without investment, there is no research, and without research, there are no products. . .

Then there is the looming shadow of health reform. One of the great requirements of a systemic overhaul is controlling costs, which were $2.5 trillion last year and growing at a rate triple that of inflation. It is clear that Congress and the administration will have to cut costs in order to come close to paying for an ambitious plan. How they do so could have a devastating impact on medical innovation.

Attempts to universalize our system and pay for it with cost controls that could stifle innovation contradict their own goal, which is, presumably, better health. It also embraces the notion that you can get something for nothing--namely, that you can get innovative new discoveries and better health outcomes somehow without paying for these discoveries to come into being.

Agreed.