Media pundits and politicians often claim that drug prices have risen prodigiously and that we should all be concerned about it because we are worse off as a result. However, even a cursory examination of the issue suggests that the claim is prodigiously wrong.
The question everyone should address is whether, drug wise, we are better off now than we were, i.e., is the cost benefit ratio greater now or years ago. The answer to this question is easily illustrated with two more questions.
If we restricted ourselves to drugs that were available ten years ago, would we be paying more now, in real dollars? It doesn’t take a genius to realize that many of the wonder drugs of yesteryear no longer have active patents and are now available in generic form, hence are much cheaper in real dollars.
Why wouldn’t we enjoy this financial benefit by buying older drugs to save money? The answer to this question is obvious. Newer more expensive drugs whose patents haven’t run out do things for us that the older drugs didn’t. The implication is obvious, too. We must be getting more value for our money now than we were then or we wouldn’t be buying these new drugs.
Most of the drugs I buy are expensive. But they provide benefits to me in terms of life and quality of life that I couldn’t buy years ago. I wish these drugs were cheaper. I wish everything was cheaper. I’d like to live like a King. But I can’t afford to live like a King, only better than before. To blame the fact that I can’t afford to live like a King on Big Business is ludicrous.
What will be the effect of regulating low drug prices? Fewer new drugs. Such regulation is simply a way of forcing you to buy older less effective drugs in lieu of newer ones that were not developed. Thus such regulations ultimately remove choices, which of necessity reduces satisfaction.