Saturday, September 4, 2004

Cherry-picking the drug market

The oft-quoted examples of U.S. drug prices being several times higher than those in Canada are misleading (“Bills OK’d on Canada drugs,” Nation, Monday). The reports that make this claim “cherry-pick” the top-selling brand-name drugs at full price in order to suit their agendas.

This disparity exists if you choose the most common doses of the most in-demand brand-name drugs and only look at the full price (which relatively few people pay) and compare them to controlled prices in Canada. However, this is analogous to comparing the price of cars based on sticker price rather than what is actually paid by consumers.

This demagoguery goes unchallenged and has become lore. A study by Patricia Danzon at the University of Pennsylvania compared a representative sample of all drugs in nine countries; this true economic analysis showed, in particular, that Canada’s prices generally were 4 percent higher than those in the United States.

Reimportation, or parallel trade, of pharmaceuticals is feasible and should be legal in a free market, but: 1) About one-fifth of the U.S. demand would exhaust Canada’s entire drug supply, 2) Even in Europe, where reimportation is legal, most countries get less than 10 percent of their drugs this way (price and practice controls make it less efficient), 3) Not all drugs from Canada originate in the United States, hence 4) We would have to legislate reciprocal licensing agreements with other countries, whereby foreign testing, manufacturing and distribution standards would have to be equivalent to those in the United States. Frequently, either theirs would have to be raised, ours would be lowered, or both.

Third, regardless of whether pharmaceutical companies spend too much on marketing, the fact, at least in part, is that the refusal of other countries to help pay for research and development is what allows them to fix prices. The pharmaceutical sector has larger profit margins than other industrial sectors; however, this is not prima facie evidence of price gouging, but an insurance policy against future costs in an increasingly hostile and unpredictable global regulatory environment. Like it or not, it is this subsidization of innovation and profit by the United States and Japanese consumers that allows newer, if not always better, drugs to come to market.

Only about one in three patented drugs ever recovers its full investment, hence the reliance on “blockbuster drugs.” To the extent that prices are high in the United States, it is a function of more than just profit motive, despite what most wish to believe — and don’t even get me started on intellectual property rights (patents).

In economic terms, a major driver of these price differentials (apart from government interventions) is consumer demand. While policy and the markets continue to grapple, there are two easy ways to decrease how much you pay for drugs: Insist on generic drugs whenever feasible (which is most of the time), and when you receive a prescription or service, ask your physician, “Is this the most cost-effective treatment?” Doing so, along with prudent lifestyle choices, will reduce health care costs.

In the long run, market demand will determine health care costs.


Powell, Ohio

It’s been said before

In reference to “Napoleonic retreat” (Op-Ed, Wednesday): Nearly 2,000 years ago, Livy told us Hannibal thought the Gallic people were perfidious by nature and could not be counted on.

Five hundred years ago, Niccolo Machiavelli, commenting on Livy, reaffirmed that men born in the same country exhibit the same characteristics. Jeanne Kirkpatrick’s observation, referenced in the column, only affirms what others said long ago.


Salem, N.H. . And he whines that “people are really frightened” by “intolerant” crowds.

Earth to Bobcat: The country is at war.

Back in the 1930s, President Roosevelt was fair game for comedians. W.C. Fields (who was a Republican) made many a joke about FDR’s tax policies, but when World War II started, Fields and other comics quit doing jokes at FDR’s expense because they realized that, in time of war, it was important to show support for the nation’s leaders.

If you can’t grasp that concept, Mr. Goldthwait, then do us all a favor, and go back to whatever limbo you’ve been in for the last decade or so.

As for Christian Toto and The Washington Times, why would you waste that much space interviewing him?

I notice that Mr. Toto mentioned the rivalry between Mr. Goldthwait and Sam Kinison, and said that Mr. Kinison’s rage was “fatalistic and mean.” Well, there’s a reason that Mr. Kinison, even though he is dead, is still considered a comic genius, and Mr. Goldthwait, even though he is alive and kicking, is considered a has-been.

That’s because Mr. Kinison was funny, and Mr. Goldthwait (still) isn’t.


Silver Spring

Nightfall on democracy?

Lynn Bateman’s letter (“‘Cafeteria Catholics,’” Aug. 28) was shocking, not because of the term “cafeteria Catholics” but because of the bald attack on freedom of religion she described.

House Minority Leader Nancy Pelosi of California and 47 of her Democratic colleagues in Congress sent a letter to Cardinal Theodore McCarrick, leader of a task force of U.S. bishops, warning him that if the bishops assert their authority in the matter of abortion, she will be seriously displeased. He was encouraged to share this not-so-subtle letter with his fellow bishops.

Mrs. Pelosi, along with Sen. John Kerry, is a pro-choice Catholic and fears the influence of the church in the coming election. Does anyone else see the seriousness of this interference by the state in the bedrock pro-life doctrine of the Catholic Church? This is tantamount to a president writing a warning letter to the Supreme Court on the eve of a major decision.

This letter, on congressional letterhead and quietly delivered by courier, was dated May 10 and is available on the Internet. On June 19, the bishops voted in favor of Mrs. Pelosi.

For the record, it is the right and the obligation of the church, according to Canon Law, to discipline, deny sacraments to, or excommunicate those who blatantly defy Catholic doctrine.

Government exists to protect the people from foreign and domestic enemies and to ensure democracy. Religion exists to teach and encourage faith and morals, without which democracy is impossible. Institutional efforts to quash free speech and interfere with freedom of religion are what the Founding Fathers were really scared about — the state telling the church what its doctrine should be and how it should handle people who do not conform.

Aren’t these the same people who are so obsessed with the separation of church and state that they have removed God from the schools and the public square? That they can now invoke the same principle to threaten and intimidate the church for asserting its authority in matters of faith and morals is stunningly perverse logic.

It is shocking and dangerous that 48 members of Congress have so poor an understanding of so basic a freedom and of the true meaning of separation of church and state.

It is a sad commentary that such an egregious breach of constitutional restraint could pass almost without notice. If the church cannot operate without the undue influence of the state, night is descending on democracy.



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