NCPA - National Center for Policy Analysis

Drug Price Controls Lead To Rationing

August 23, 2000

Leftists want to add a drug benefit to Medicare, but the program is already going broke faster than Social Security. The only want to pay for the drug benefit, says former Gov. Pete du Pont (R-Del.), policy chairman of the National Center for Policy Analysis, is to control drug costs.

Thus an essential component of the plan is for the federal government to set the price companies are allowed to charge pharmacies -- possibly at a 40 percent discount. Yet every past government effort to control costs through price controls has backfired -- whether it be oil, rents, products or services. For example, Medicaid's effort in 1990 to require that they receive the lowest prices led to higher prices and smaller discounts in the private sector.

When other countries slapped price controls on drugs the result was rationing.

  • When the British prescription drug plan refused to cover the cost of new anti-flu drugs, many seniors and asthmatics wound up in hospitals and died.
  • Thousands of seniors in Ontario, Canada, are being denied new treatments for osteoporosis, Alzheimer's and Parkinson's diseases in the name of containing the government's health system's costs.
  • New Hampshire's Medicaid program limited access to new drugs -- which, for example, saved $57 per year on drugs for schizophrenia patients.
  • But because the rationing drove people to mental institutions for help, it added $1,530 per year per psychiatric patient in costs for visits to mental health clinics and emergency rooms.

The rise in drug costs is due to an influx of new wonder drugs, experts say, which free us from relying on more expensive and less effective kinds of care.

Source: Pete du Pont (NCPA), "Rx for Disaster," Washington Times, August 23, 2000.


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