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Put a Lid on Price Caps

“Americans Back Price Negotiations on Medicare Drugs,” The Washington Post trumpetted on Saturday.

Well, that’s accurate, until they find out the dangerous side effects of such negotiations.

A November survey by Dutko Research found that support drops by more than half – from 75 to 30 percent – once voters learn that government negotiation would mean that they and their doctors would be free only to choose from a list of government-approved drugs, according to the White House.

Giving the federal government the power to negotiate drug prices means giving it the power to control drug prices.

And that means limiting the range of available drugs.

That’s because price caps can make it unaffordable for drug companies to research and develop life-saving and life-enhancing medications. New drugs are extremely expensive to create. The process requires developing the scientific knowledge to combat diseases chemically, experimentation in well-equipped laboratories, and rigorous testing over prolonged periods of time. If companies cannot recover these costs through prices, they have to slow down drug development.

The Canadian government restricts the drugs that are available to sick patients in order to cut costs. While Americans and their doctors frequently have the choice of several different drugs for a particular illness, Canadians often have only one. That means that patients who are allergic to the one available drug, or who suffer from severe side effects, or who simply don’t respond to it, don’t have another option.

Consequences of this limitation have been tragic. In 1997, 49-year-old Ruth Millar of Victoria was stabbed to death by her own son. Aaron Millar had suffered from schizophrenia for about two years, but he’d been unable to obtain a promising anti-psychotic drug because British Columbia bureaucrats blocked access to it.

That kind of restriction could follow federal price negotiations across the border to the United States.

There is a better way. The free market remains the best supplier of human needs–including healthcare needs. Government should get out of the drug business and let the market work.