West Virginia Gov. Bob Wise wants a Canadian-style system to control pharmaceutical prices.
But if he gets his way, West Virginians will have fewer drug choices and longer, more costly illnesses.
Faced with a state budget crisis, deepened by rising Medicaid costs, Mr. Wise blames higher drug prices for West Virginia’s fiscal woes and wants drug-makers to charge the same prices set by the Canadian government, not by the marketplace.
But Canada’s rigid price-control system isn’t the answer. Because of its price-fixing, many of the newer and more effective pharmaceuticals for illnesses like cancer and hypertension are unavailable there.
The price of many medicines here is high, but they treat or prevent illnesses that would cost people hundreds of thousands of dollars more than the medicines themselves. Price controls that impose disincentives to develop new drug treatments, or prevent the best drugs from getting to ill patients, would make health care worse, not better.
A study by economist Frank Lichtenberg at Columbia University shows that every dollar spent on newer generations of drugs saved four times that amount in hospital costs.
Citizens for a Sound Economy [CSE], a Washington-based free market group that is lobbying against Gov. Wise’s plan, explains that “because prescription drugs are more often used for preventive care, they stave off more debilitating, more costly medical conditions requiring expensive and lengthy hospitalization. While a $600 annual prescription for two leading cholesterol-reducing drugs may seem expensive, it is the long-term effect of those drugs that helps avert an emergency bypass operation and lengthy hospital stay at an average cost of $300,000.”
CSE has launched a public awareness campaign in West Virginia to counter Mr. Wise’s misguided proposals for a Canadian system. In addition to a series of radio ads critical of the governor’s plan, it is sending “Canadian Health-Care First-Aid Kits” to state legislators.
Included is a five-year calendar “so West Virginia citizens can schedule their emergency surgery at a pace consistent with the delays Canadian citizens must endure.” “Wise’s proposed solution to West Virginia’s crisis is nothing more than a hidden tax on drug-makers – one that will force citizens to ultimately pay the price through the drastic reduction of services and lack of availability of life-saving drugs,” said CSE President Paul Beckner.
In many cases, West Virginians will be forced to use cheaper generic drugs that are often not as effective as original drugs or the newer drugs that replace them.
But there is more in Mr. Wise’s initiative than meets the eye. The governor has had a long affiliation with Business for Affordable Medicine, a fat-cat lobbying group whose members “will reap billions of dollars in windfalls if more patients are forced to switch to generic drugs,” according to the CSE.
Mr. Wise’s crusade to adopt Canada’s price-control system ignores some important facts, according to a CSE study. Among them:
c Some, though not all, drug prices are cheaper in Canada, subsidized by taxpayers who on average send more than 35 percent of their income to finance the government’s welfare state programs.
“But when a government buys drugs, it must ration them. With no private sector alternatives, patients have no choice but to accept what their government – not their doctor – decides is best,” says a CSE spokesperson.
c If Americans were required to buy the same pills in Canada that they bought here, they would end up paying 3 percent more, according to a study by University of Pennsylvania professor Patricia Danzon.
The reason, according to the CSE, is that “generic drugs, which account for half of U.S. consumption, are less expensive under the competitive U.S. system than the price-controlled Canadian system.”
* The Canadian plan that Wise wants to copy has a notoriously poor health care record. Writing in the Canadian Medical Association Journal, Dr. Richard Davies, a cardiologist at the University of Ottawa, found that more than 1,500 people were on lengthy waiting lists for heart bypass surgery. Some die before surgery can be scheduled.
* As for Canada’s drug program, a recent survey found that nearly 30 percent of British Columbia doctors reported that patients ended up in the hospital because of government-mandated substitutions of prescribed drugs.
Congress will no doubt be debating a prescription drug plan this year. And there will undoubtedly be lawmakers here who, like Wise, want to use Canada’s system. That would be a monumental, and in some cases deadly, mistake.
A market-oriented plan can be devised to help poor and low-income people get the medications they need. This could be part of a competitive prescription drug benefit system that lets consumers shop around for the health-care coverage that suits their needs and their pocketbook.
Such a plan should be part of a larger reform that gives taxpayers a tax credit to offset their medical expenses, including drugs.
The best way to keep down drug prices is to encourage competition in the pharmaceutical industry and wider choices among public and private benefit plans. The worst way would be a Canadian-style, state-preferred drug list that prohibits doctors from prescribing the most effective drugs on the market for their patients.
FreedomWorks Letter to Congress in Support of Fiscal Commision Act (H.R. 5779)