F.R. Duplantier reporting Behind The Headlines
Week of:
March 19, 2000
Clinton and Gore: Security Experts?

F.R. Duplantier

by: F.R. Duplantier

Over 500 economists agree: price controls on prescription drugs is a truly bad idea.

A full-page ad in a recent issue of the Capitol Hill newspaper Roll Call makes a compelling case against price controls on prescription drugs. "For thousands of years, governments have tried to control prices," begins this open letter to the President and Members of Congress, signed by 532 economists and sponsored by the Independent Institute, the National Taxpayers Union, the Association of American Physicians and Surgeons, the Small Business Survival Committee, and other groups. "The universal experience has been that price controls produce shortages, black markets, reduced quality, and economic hardship.

"Now, once again," the letter continues, "programs to control healthcare prices are on the policy agenda. Under the guise of controlling Medicare costs and shielding the elderly from 'unfair' prescription- drug prices, current proposals would restrict discounts on drug prices, cap healthcare spending, and limit insurance premiums. Among those adversely affected would be hospitals, members of managed care organizations, public health clinics, and government programs such as Medicaid and the Veterans Health System, which, because of their mass-buying power, are able to negotiate favorable drug prices for patients.

"In countries with price controls, healthcare services are severely rationed," the letter asserts. "Patients wait months and sometimes years for surgery, suffering significant harm to health, even death, as a result. Government bureaucrats, rather than doctors or patients, select treatments. Pharmaceutical innovation languishes. In recent decades, American healthcare firms have created hundreds of new drugs, devices, and other medical products that have saved millions of lives, not only in the United States but around the world. The best way to save millions more is to enhance the incentives to research, develop, and market new healthcare products. Existing price controls and other trade restrictions affecting healthcare goods and services should be removed in order to encourage dynamic entrepreneurship in competitive markets. The result will be lower prices, greater innovation, and higher quality."

The 532 signatories insist that "price controls do not reduce medical costs. Nor do they call forth improved healthcare services. Instead, they produce lower-quality medical care, reduced innovation, and costly new bureaucracies to monitor compliance. . . . Price controls harm consumers of medical services, especially those most in need of healthcare services."

Will this message from a mob of economists sway the President? Not likely. Perhaps it should have been addressed to a respected intermediary, instead, someone with a vested interest in the future of the health- care industry who happens to have the President's ear -- someone like his daughter, Chelsea. If Chelsea attends medical school and becomes a doctor, she may have to practice her profession under the stifling conditions favored by her lawyer parents. In their eagerness to plunder the U.S. healthcare system for the benefit of their comrades at law, Bill and Hillary Clinton may have overlooked the deleterious effects their success would have on their daughter's career. Chelsea, herself, may not have considered the consequences of her parents' rapacity. If she hasn't, she should, and intervene now on behalf of her colleagues to be.

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