Why Medicines Cost Too Much -- The Government Is Not Here To Help You

I'm finally back to the series on why your medicines cost too much. This time around we're going to look at what many (and they control the news media) say is the solution to the problem -- the ye olde Federal Government. I maintain It is one of the problems, and in many ways.

First off, let's take the Food and Drug Administration (please!). This agency is tasked with protecting the American public from dangerous drugs, and despite recent events with various drugs (Rezulin, Vioxx, Zelnorm, Propulsid, Avandia), they actually are doing a fairly good job of this. After all, the American drug consumer never saw thalidomide (as a morning sickness agent), whereas in Europe many people were born with deformed limbs because of this. And even though thalidomide is now actually on the market (it does have a use for multiple myeloma and certain kinds of resistant leprosy), it is highly regulated and covered with warnings. I of course have no documentation of this, but I am sure there are other medications that we have been equally protected from. It's hard to prove a negative, after all.

Unlike others, who because of the need to withdraw a small number of medicines from the market feel that the FDA allows medications onto the market too quickly, I hold the opposing view. I think they don't approve medications quickly enough. Most of this is because the FDA will not accept foreign (mostly European) safety data for medications and insists that the drug companies do specific studies in the U.S. for them to review. This adds to the already high cost of bringing a drug to market, which must then be recouped. And since a company's patent (and exclusive right to market a new drug) starts when they first invent the molecule and not when they get it on the market, this delay in getting to market shortens the time the company has to recoup the cost. Higher costs, less exclusivity, up goes the price! Meanwhile, some of these drugs have already been on the market in European nations for up to 10 or 15 years! The post-marketing safety data in these countries (or at least those countries we scientifically trust, like England, France, Germany, Spain....) could be used to show that the drug is safe for America, but to my knowledge, the FDA will not accept this data for review.

Another way the Federal government causes escalating drug prices is through its protection of the managed care system. I strongly feel that managed care has never brought down any costs in the medical field, but it sure has saved a lot of money for the insurance companies! In the 1970s, the Congress passed a law commonly called ERISA -- the Employee Retirement Security Income Act of 1974. Though its name does not immediately suggest this has anything to do with healthcare, the law provides certain regulation of employer-provided health insurance programs. Despite the fact that the law does not explicitly provide for this, the health insurance industry has successfully and repeatedly used ERISA as a shield, arguing in court that the federal regulation preempts any state law to otherwise regulate health insurance, thereby preventing state courts (where most malpractice and liability cases are brought) from using state laws to penalize the insurance companies when they deny payment for obviously needed medical care.

The health insurance companies thus literally get away with murder, with their great lie that they only pay for medical care, they don't decide whether care is or is not provided, and that's because of ERISA. As far as I know, ERISA says nothing of the sort, but legal precedent has interpreted it to provide this shield. And of course, legal precedent by a judge is so much more important than what a law actually says. Or a Constitution for that matter. Meanwhile, the cries of many to amend ERISA to explicitly say what is and is not protected go unheeded. The only instances when the insurance companies have not been able to use ERISA as their shield is when their denial of (payment for) care involves a government employee. You see, like most onerous legislation (the ADA, HIPAA, et cetera), the government exempted itself from ERISA.

The Federal government does not just protect managed care, however. Oh no, It expands it. Just what do you think Medicare and Medicaid are? Let's see, both are programs that contract with "providers" to provide care at a dictated discounted price. Why, that's a PPO! And Medicare Part D? Just another pharmacy benefit management system; just more managed care. It doesn't matter whether the Part D benefit is run by the real managed care industry or the faux one called the government. Managed care is managed care. And it will, it can do nothing but drive up the cost to the consumer. The only other choice for managed care is rationing.

But that's another rant for another time.