NCPA - National Center for Policy Analysis

Clinton Drug Plan Too Costly

December 1, 1999

When Congress reconvenes, it will consider President Clinton's proposal to extend Medicare coverage to prescription drugs. The plan has already drawn criticism.

  • The Clinton plan would pay half the cost of medications up to $1,000 a year for a monthly premium of $24.
  • That would increase to a cap of $2,500 and a monthly premium of $44 by 2008.

It sounds fine, critics say, except for two things: it would require a government bureaucracy to make medical decisions and impose a form of price controls on the pharmaceutical industry.

According to a report by Robert Goldberg for the NCPA, the Clinton plan would reduce prescription prices by stressing generic drugs at the expense of developments in pharmacology, with patients taking more, cheaper prescriptions that are less expensive than new products the industry could no longer afford to create. The sophisticated drugs that did exist would be rationed to keep down costs.

Goldberg also points out that prescription drug expenditures haven't soared the way some claim, citing a GAO report that the government's producer price index has "overstated drug inflation substantially since at least 1984."

While some complain that the same drugs can be bought in Mexico and other developing countries for half what one pays in the United States, Goldberg notes that drugs are offered in those countries at close to production cost so people can afford them. The price of prosperity in America is higher costs for high-powered drugs so pharmaceutical companies can recoup their investments quicker and generate funds for more innovation.

Source: Lee Cullum, "Clinton's Medicare Drug Plan Is Flawed," Dallas Morning News, November 30, 1999.

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