Prescribing on Price

To the editor:

The biggest difference between the U.S. and other countries that is omitted by John Tierney [“What the Prescription Drug Debate Gets Wrong,” Autumn 2018] is that the U.S. has a huge number of uninsured and underinsured people. Many of those people can’t afford any drugs—old, new, generic, or name-brand. The uninsured can at least take advantage of programs through the drug companies to get their meds free, but the underinsured are left without even those options and are unable to afford or otherwise access new drugs that are saving and changing lives. Medical bills are still a leading cause of bankruptcy, and expensive drugs are a large part of those bills.

Jamie Mathis

To the editor:

What would happen if we prohibited pharmaceutical companies from charging more domestically than they do for other developed countries? Wouldn’t that tend to limit the free-rider effect and result in a fairer distribution of drug pricing around the world? Might allowing drug re-importation have a similar effect on leveling out pricing?

Michael Gorwito

John Tierney responds:

There are indeed ways to make drugs more affordable. But even though there are more people without health insurance in the United States than in other affluent countries, Americans—including the uninsured, as well as those on Medicare and Medicaid—have access to more and newer drugs than do people in other countries. That’s why Americans receive better treatment and enjoy better outcomes for heart disease, cancer, and other illnesses.

The problem of the uninsured is real but wildly exaggerated by advocates of nationalized health care. Obamacare was rationalized as a way to improve health by providing more Americans with insurance through Medicaid, but careful studies have failed to show health improvements for uninsured people enrolled in Medicaid.

Another justification for Obamacare—that medical bills are bankrupting large numbers of Americans—has also been debunked. The idea was popularized by Elizabeth Warren’s research purporting to show that 60 percent of bankruptcies are caused by unpaid medical bills, but rigorous researchers have put the true figure at about 5 percent. Addressing the bankruptcy problem doesn’t require nationalized health care. People already protect themselves against other financial calamities—fire, flood, car accidents—by buying insurance. Obamacare’s architects were so intent on forcing Americans to buy expensive health-insurance policies covering routine medical expenses that they made it harder for them to buy cheaper policies that would cover only catastrophic expenses—and protect them from bankruptcy.

Michael Gorwito raises a question that’s under consideration by the Trump administration: What if companies were forced to charge Americans the same prices that Canadians and Europeans pay for prescription drugs? That would indeed solve the free-rider problem, preventing Europeans from reaping the benefits of drugs that were largely financed by the revenues that companies make from higher prices in the U.S.

But such a policy would effectively impose European price controls, which would drastically curtail development of new drugs—probably by 30 to 60 percent, as my article noted. So everyone would end up worse off, including Americans. It may seem unfair that Americans pay more than Europeans, but it buys us earlier access to more breakthrough drugs, and the resulting benefits—longer life, less disability—are worth much more than the extra dollars we’re spending.


City Journal is a publication of the Manhattan Institute for Policy Research (MI), a leading free-market think tank. Are you interested in supporting the magazine? As a 501(c)(3) nonprofit, donations in support of MI and City Journal are fully tax-deductible as provided by law (EIN #13-2912529).

Further Reading

Up Next