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Eminent Domain Stuff

New London Update (2/24/06)
Coverage of the Rally at New London's City Hall (w/ pics)

Wednesday, April 14, 2004

More on Robbing Peter to Pay Paul

Why do I say the prescription drug issue is unnecessarily complex? Simple, here are the facts as I see them.
1) Drug companies invest in the neighborhood of $800 million to bring a drug from discovery through clinical trials. This does not include advertising.
2) Drug companies are, well, companies and as such must make a profit or go out of business.
3) Drug companies sell their wares all over the world.
4) Other countries (read: Canada, Britain, France, etc.) have various forms of socialized medicine and, thereby, dictate the price of drugs to be sold.
5) The price dictated by those socialists doesn’t leave much room for profit, putting pharmaceutical companies in a tough spot.
6) Since they’re going to make a profit or become extinct, drug companies are forced to make the lion’s share of the profit in the only country that is both an enormous market and does not artificially regulate prices…i.e., the good ol’ USA.

The bottom line is that we Americans are subsidizing the rest of the world’s supply of drugs. The socialists are happy…they’re getting expensive meds for a fraction of the free market price. Unfortunately for us, we have to deal with the consequences.

What’s a country to do? We have a few choices. We could legalize the importation of medicine from Canada either on an individual basis or in bulk, effectively importing price controls or we could institute our own version of price controls. As it turns out, there is a rarely enforced proviso on the books which states that the government has the right to expect “reasonable” prices for drugs that it helped fund the development of. While this may very well be reasonable to a certain extent, it does not solve the problem. The issue is that drug companies must make a profit. If they do not, then we will find ourselves in the unenviable position of having a depleted or empty drug pipeline.

The only answer that seems to present itself brings along baggage that will certainly hamper its implementation, if not prevent it entirely. The answer must be to let the market decide. Any other solution involves artificially deflated prices in one place and artificially inflated prices elsewhere. Such a system is being held far from equilibrium and is not sustainable over the long term.

The problem here is that free market treatment of anything must be truly free. We cannot have some countries sucking the life out of others by forcing their costs down. I don’t necessarily have the answer to how the problem of Canada, France, etc. should be dealt with. I do know, however, that these countries must not be allowed to continue to take advantage of our generosity. To do continue as we are today may seem more humane and neighborly today, but over the long run we are sure to no end to the problems of high drug prices in this country.


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