NCPA - National Center for Policy Analysis

Stingy Bureaucrats Will Withhold Drugs

October 3, 2003

European price controls for prescription drugs leave American consumers footing the bill for the industry's research and development, and negatively affect the health care of European patients, a reality increasingly acknowledged by governments on both sides of the Atlantic, says David Gratzer (Manhattan Institute).

Unfortunately, the Bush administration may be opening the door to the idea here at home, in the form of Medicare prescription drug benefits, says Gratzer. American seniors may soon find federal limits on the types of medicines they receive, with serious consequences for their health.

At present, Washington plays a modest role in the purchase of prescription drugs. Apart from funding in-hospital prescriptions for veterans and Medicare patients, the federal government bears little of the nation's annual $150 billion in prescription drug costs. Yet that's about to change in a major way:

  • If Congress agrees on the prescription drug benefit for Medicare, the federal government will soon pay for about 20 to 25 percent of America's pharmaceutics, with influence over another 15 to 20 percent.
  • More worrisome, though, is that Washington would become the biggest funder of prescription drug purchases in the world.
  • With such a financial stake, Medicare bureaucrats will be tempted to directly control drug prices.

Experience overseas shows that governments that pay for prescription drugs tend to involve themselves extensively in both pricing and availability. So, while the EU drug-approval process is relatively speedy, individual nations throw up their own hurdles to slow the introduction of new drugs. To bureaucrats eager to keep to their budgets, new drugs are seen only as new expenses -- even if they save lives, says Gratzer.

Source: David Gratzer, "How Not to Handle Health Care," Wall Street Journal, October 1, 2003.

For text (WSJ subscription required),,SB106497014565175500-search,00.html


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