TCS Daily

Dems' Drug Duplicity

By Bobby Eberle - March 15, 2004 12:00 AM

Liberal Democrats are outraged. Protesting a clause in the recently passed Medicare bill that prevents the federal government from "negotiating" (fixing) prescription drug prices, Sen. Ron Wyden (D-Ore.) has co-sponsored a new bill that would allow exactly that. Minority leader Tom Daschle (D-S.D.) supports Wyden, calling the clause "indefensible," arguing that "to deny the federal government from negotiating lower prices for prescription drugs is quite amazing to me." From Congress to the campaign trail, Democrats are following Daschle's lead, lambasting the anti-price fixing rule as a giveaway to drug companies.

One problem: prohibiting drug price controls was the Democrats' idea. It was part of Sen. Daschle's own prescription drug benefit bill, which he introduced one year before then-President Clinton left office. The minority leader's bill attracted no fewer than 33 Democratic co-sponsors in a roll call that included such liberal Democratic luminaries as Sens. Edward Kennedy (D-Mass.) and Tom Harkin (D-Iowa).

At the time, Sen. Daschle played up the protections against price controls, saying "Our plan mirrors the best practices used in the private sector. For beneficiaries in traditional Medicare, prescription drug coverage would be delivered by private entities that negotiate prices with drug manufacturers. This is the same mechanism used by private insurers." Over 200 House Democrats, including Rep. Richard Gephardt (D-Mo), similarly voted for this approach.

The rationale for opposing price controls was spelled out on the Senate floor by none other than Sen. Wyden. "What troubles me about plans to deal with prescription drug costs that involve price controls [is that] we will have massive cost shifting," the Senator explained. "We will have the cost passed on to someone who might be 26 or 27" because "all of a sudden they find out their prescription drug bill shoots up because Congress adopted an approach in this area that didn't use marketplace forces." Wyden's argument, which is correct, was that price-fixing for Medicare drugs would make prescription drugs more expensive for those not covered by the benefit.

Of course, the idea that price controls increase rather than reduce the scarcity of a product is hardly new. Decades of research on every type of price cap from rent control in New York City to oil price regulation and gas lines in the 1970s confirm this effect. One renowned study of price control found so many examples of failure that the author felt emboldened to entitle his study Forty Centuries of Wage and Price Control: How Not To Control Inflation.

That's all changed now, as the election approaches. In turning their back on the thoughtful opposition to price controls liberal Democrats displayed as recently as last year, they may believe they have found a way to attack the new Medicare law in an election year by promising something that has no apparent cost. But in politics, as in life, there is no such thing as a free lunch. The people who would pay the price for this political posturing are the younger families with no coverage for prescription drugs.

Such restrictions are already a reality in many Medicaid programs in which politicians try to curb costs and clinicians cannot prescribe drugs without prior authorization. For instance, a recent Kaiser Commission study of Michigan's Medicaid pharmaceutical cost-control program found that vulnerable patients suffered from the ensuing delays with one HIV/AIDS patient hospitalized while waiting for the necessary medication.

America finally has the prescription drug coverage endorsed by Democrats for years. As we hear more of their new-found enthusiasm for price controls this year, Americans who depend on their prescription drugs should beware politicians offering quack cures.

Bobby Eberle is President and CEO of GOPUSA, a news, information, and commentary company based in Houston, TX. He holds a Ph.D. in mechanical engineering from Rice University.


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