By: James Sherk

16 January 2004 God and Medicine: How Christian's Should Approach the Issue of Price Controls on Prescription Drugs.

Recent news reports have focused on the high cost of prescription drugs. Millions of Americans find it difficult to afford the medication that their doctors have prescribed. Congress has recently enacted a vast new entitlement program to provide prescription drugs to both wealthy and impoverished senior citizens. Increasingly, however, the public debate has centered on using price controls to solve the problem. Some politicians and advocacy groups want the Federal government to directly set the prices that pharmaceutical companies can charge. Many other politicians support imposing indirect price controls by legalizing imports of prescriptions drugs from nations, such as Canada, that already have price controls (1). This would effectively set prices in America at whatever level foreign governments have established, as Americans could simply purchase the imported drugs for whatever they cost overseas, preventing any American firm from charging a higher price.

What should American Christians think about the issue? As citizens in a democracy, Americans participate in setting government policy, and have a responsibility to educate themselves about the issues facing their government. As servants of Christ, Christians must always strive to follow God's will when they make decisions. Many Christians have come to the conclusion that since price controls would make it easier for the poor to afford needed, life-saving, medicine, that God's call to care for the poor suggests that they should support price controls(2).

Certainly all Christians should share the goal of helping the poor. However God makes it clear that Christian efforts to help the less fortunate must go beyond good intentions. In the words of James, the brother of Christ, "Suppose a brother or sister is without clothes and daily food. If one of you says to him, 'Go, I wish you well; keep warm and well fed,' but does nothing about his physical needs, what good is it?"(3) The same command applies to illnesses. Christians must do more than support policies intended to heal the sick, those policies should actually do so. An understanding of how the pharmaceutical industry works, and some basic economics, reveals that, despite the good intentions of those who advocate them, imposing price controls on prescription drugs would actually lead to the death of millions. Christian should obviously oppose such a policy.

Economists rarely achieve a consensus on any issue; but virtually every professional economist agrees that price controls create shortages, since they destroy the incentive to produce. This also applies to prescription drugs.

The pill that a patient purchases actually costs very little to manufacture, often far less than a dollar. Prescription drugs cost so much because it takes quite a lot of money to learn what pill, exactly, to produce. Most potential drugs do nothing to heal the sick. Pharmaceutical companies screen an average of approximately ten thousand compounds in the laboratory for every viable drug that they discover. The process of testing potential drugs and receiving FDA approval takes ten to fifteen years. When scientists do find a successful drug it must then bring in enough new revenue to cover not only the cost of researching and testing it, but also the cost of research into the many unsuccessful drugs that the pharmaceutical companies examined.(4) According to the Tufts Center for the Study of Drug Development, it costs pharmaceutical companies an average of $800 million to invent each new drug that comes to market.(5) This money must come from somewhere.

Prescription drugs cost more in the United States than in many foreign countries because price controls prevent firms from charging enough overseas to cover the cost of R & D. They earn enough to cover the cost of producing the pill, but not much more.(6) The United States is the only industrialized nation that permits drug firms to charge enough to recoup their research and development expenses.(7) If the American government also dictates the prices what drug companies may charge, they will have no way to fund research and development into new drugs. Consequently, they will not spend money researching new drugs(8). Price controls will permit people to buy any drug currently on the market for relatively low prices, but it will end any chance of developing new drugs to cure illnesses we cannot currently cure.

Cancer and AIDS kill millions of people each year, and while drugs are available to treat these diseases, no one has yet developed a cure. If America imposes price controls we never will. Currently, there are over 1,000 plus drugs undergoing testing and development, including 400 to fight cancer, and 122 to treat heart disease.(9) If companies can't earn back the cost of developing these drugs, they will never bring them to market, and they cannot be used to heal the sick.

Pharmaceutical companies innovation proceeds at a rapid pace. In 1990, no one could buy a drug that treated Alzheimer's disease for any price, since no treatments existed. Now, there are four drugs to help Alzheimer's patients on the market and drug companies are developing twenty more.(10) If the government had imposed price controls a decade and a half ago, those drugs would not be available today, and Alzheimer's patients would have no choice but to suffer without the aid of any treatment.

The world would be a better place if it cost less than the $800 million it currently does to develop new pharmaceuticals. But it does not, and ignoring reality does not make it go away. Christians must live in the fallen world we find ourselves in, not the world we wish we did. Legislation that forces drug companies to artificially lower their prices prevents them from earning the money they need to invest in creating new drugs. In a well-meaning attempt to help the poor, this legislation would impose a death sentence on millions suffer from currently incurable diseases. Christians need to do more than intend to help the sick; they should actually do so. Price controls do not, and Christians have no moral or religious basis for supporting them.

Endnotes

(1) "Demonizing Those Who Cure Us," Doug Bandow, National Review Online, July 23, 2003. http://www.nationalreview.com/comment/comment-bandow072403.asp (back)

(2)See the National Council of Churches position on the issue at http://www.ncccusa.org/news/03prescriptiondrugs.html (back)

(3) James 2:15-16. NIV translation.(Back)

(4)"More About the Peter Jennings Special on Prescription Drugs," Pharmaceutical Researchers and Manufacturer's of America. July 1, 2003. Online at: http://www.phrma.org/actions/printFriendlyPage.cfm?t=46&r=522 (Back)

(5)Ibid. (Back)

(6) "Prescription Drug Costs: Has Canada Found the Answer," The National Center for Policy Analysis, May 19th, 2000. http://www.ncpa.org/ba/ba323/ba323.html. (Back)

(7)"Demonizing Those Who Cure Us," Doug Bandow, National Review Online, July 23, 2003. http://www.nationalreview.com/comment/comment-bandow072403.asp (Back)

(8)"The Other Drug War," Frontline, June 19, 2003. http://www.pbs.org/wgbh/pages/frontline/shows/other/interviews/powell.html (Back)

(9) "More About the Peter Jennings Special on Prescription Drugs," Pharmaceutical Researchers and Manufacturer's of America. July 1, 2003. Online at: http://www.phrma.org/actions/printFriendlyPage.cfm?t=46&r=522. (Back)

(10) Ibid. (Back)

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