- The Washington Times - Sunday, September 3, 2000

Class-warfare rhetoric may unite the liberal members of the Democratic Party and prevent defections to Ralph Nader in November, but it is not the way to unite the country.

As we found out during the Democratic National Convention, to Vice President Al Gore, if it isn't the big oil companies, it is the big pharmaceutical companies, the insurance companies, the HMOs and the wealthy who threaten the United States. And just to make sure that all the bases were covered, he also referenced unspecified threats from powerful forces and powerful interests.

This not only turns Americans against Americans, these are also mistaken policies. Take the case of drugs, which is the big issue that Mr. Gore has recently been emphasizing.

Even if Mr. Gore loses the race, simply the constant threat of price controls on drugs and the attack on corporate products reduces investments today and delays the introduction of new drugs. Some voters will ultimately pay for these delays with their lives.

Mr. Gore's position papers claim that drug prices are needlessly higher in the United States than in countries with price controls. He gets some mileage out of pointing out that the ulcer and heartburn drug Prilosec costs about half as much in Canada as here. Yet he has it backward. Rather than trying to place price controls on Americans, he should be trying to remove such controls in other countries.

Drug companies will produce an already existing drug for the Canadian market as long as they can cover the drug's production costs. But covering the simple production costs does nothing to recoup the estimated $500 million and 12 to 15 years that it takes to bring the average new drug to market. Canadians can get away with this type of price control only because the drugs were developed in the first place with the expectation of higher profits on U.S. sales.

Unfortunately, with price controls all over the world, there are no large markets for Americans to have a free ride.

Although price controls on oil and other products are usually short-lived, as voters eventually object to the shortages created by government intervention, the pernicious effect of drug regulations are more difficult to observe. With long lags in the development and approval process for drugs, it will be years before we notice the lack of new drugs, and many people will never draw the connection between the controls and the reduced innovation. Even if people realize that controls are preventing new drugs from being developed, it will be very difficult to remove the controls. If controls are removed, there will be a long delay before new drugs start being produced again, simply because of the 12 years or so it takes to produce them.

Nor is it even obvious that lifting such regulations would have the desired effect, since drug companies would have to be convinced that new controls would not be imposed as soon as newly developed drugs hit the market.

During the health care debate six years ago, 565 of the nation's top academic economists signed a letter to President Clinton warning that "the threat of price controls on medicine has already decreased research and development at drug companies, which will lead to reduced discoveries and the loss of life in the future." Mr. Gore apparently has learned little from that debate.

There is a big difference between helping poor people buy insurance to cover the cost of medicine George W. Bush's proposal and price controls. The irony is that Mr. Gore's policy will cost lives.

Mr. Gore's rhetoric is just as misplaced when it comes to HMOs. Flexibility in coverage is great everyone values being able to go straight to a specialist and have all possible tests. Again, the problem is that these services aren't free. We can pick expensive insurance that gives us great flexibility, or we can pay less and put up with more restrictions. The so-called patient's bill of rights simply eliminates the option of cheaper coverage. Are we, then, supposed to be surprised when there are more uninsured? Who believes that the government policy of one-size-fits-all solution will allow people the same choices they currently have?

Anyone who has read Mr. Gore's book "Earth in the Balance" or who is familiar with his voting record as one of the biggest spenders and regulators in Congress will not be surprised by his desire for micro-regulating businesses.



John R. Lott Jr. is a senior research scholar at Yale Law School.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide