Government And Insurers Push Price Controls For Prescription Drugs

Opponents of ObamaCare warned that a government-run health care program would lead of rationing and price controls. A drug called Sovaldi is proving the law’s detractors right.

Sovaldi appears to be a miracle drug. In tests over 90% of people with Hepatitis C have been cured by the drug. Hepatitis C is a liver disease that often leads to cancer and kills over 15,000 people a year. The cure, however, is not cheap. Treatment with Sovaldi can cost nearly $80,000, leading government agencies, liberal politicians and the insurance lobby to demand government price controls on the drug.

Earlier this year, liberal stalwarts Reps. Henry A. Waxman (D-CA) and Diana DeGette (D-CO) demanded to know how the company that funded the research and brought the drug to market, Gilead Sciences, Inc. determined its price. After a briefing from company executives, the Reps. then demanded hearings. In a letter to the House Energy and Commerce Committee Chairman Rep. Fred Upton (R-MI) the two wrote, “The company provided this briefing, but did not provide a compelling justification for the high price they are charging for most patients in the United States.”

Thanks to ObamaCare, drug companies not only have to find cures but are forced to justify their pricing to government officials and politicians. Worse yet, the insurance industry has joined the choir. Lobbyists for the insurance industry are pushing Congress to enact price-fixing schemes for fear they will have to pay out claims on the cures. America’s Health Insurance Plans, the Washington, DC lobbying arm of the health insurance industry appears ready to pay for the costs of Hep C and liver cancer treatments but cannot stand the idea of paying for a drug that actually cures the disease.

“Benefit design alone, however, cannot solve the challenge posed by the dramatic increase of prescription-drug prices that puts lifesaving cures out-of-reach for millions of Americans,” says the group’s spokesman. “Ultimately, that will require drugmakers to price their products at sustainable levels.”

The insurance industry has another supporter — John Rother, the former head of AARP and the CEO of an outfit called the National Coalition for Health Care. Rother is a long-time supporter of a Canadian-style socialist health care plan. He says that miracle cures like Sovaldi is part of a “tsunami of expensive medicines that could literally bankrupt the health care system.”

The reality is that the costs of bringing a drug to market typically stand between $1.2 and $4 billion. If companies cannot recoup their cost of investment, there will be no incentive to find cures. Imposition of price controls would be devastating on the American people. All of these cat calls for government imposing pricing comes from the same folks who blew $1 billion on the creation of a website for ObamaCare.

Milton Friedman once warned that imposing price controls on drugs would be “more difficult to remove than other price controls. Controls on oil and other products often tend to be limited or short-lived, as voters eventually object to the resulting shortages and distortions. The effects of drug price controls, however, are far more difficult to observe because they mainly affect medicines that haven’t been invented yet.”

Or as Donald Rumsfeld would put it, the “unknown, unknowns.” We wont’ know what cure we are missing out on as we blindly suffer from medically curable or treatable diseases. This may be a step forward for government bureaucrats; it’s clearly a step backwards for the quality of health care in America.