The Post had yet another piece attacking plans to reform the Medicare drug benefit, although they at least had the decency to put their latest shot on the editorial page. Recognizing the artistic license that such pieces enjoy, this one still exceeds the bounds. The writer, an economist at a right-wing Italian think tank, warns against Italy's mistakes in regulating drug prices. For example, he claims that the regulation of drug prices makes it difficult for people to get reliable information about drugs. Well, in the United States, the incentives created by unrestrained patent monopolies has created a massive industry designed to deceive patients and doctors about the effectiveness of drugs. We are also told that regulation of drug prices has led to rapid medical care inflation in Italy over the years from 1998-2003. Yep, it's been more rapid in the United States over the same period (about 25 percent, according to the OECD). Then we are told that the pharmaceutical companies have moved their research out of Italy because of the price controls. If this is true, then it means that the industry is trying to use its investment decisions to affect politics, it has the exact same protection for its research regardless of which country it is done in. A profit maximizer finds the lowest costs for research, it is irrelevant what the price drugs sell for in the country. Finally, he implies that in a free market drug prices are expensive. WRONG, in a free market drugs are cheap -- Wal-Mart sells them for $4 per prescription. It is only government granted patent monopolies that make drugs expensive.
--Dean Baker