The Clinton Administration's Mixed Messages On Biomedical Research And Innovation

Do Bill Clinton and the leaders of his health-care reform task force share the same goals? Compare the rhetoric in the president's State of the Union address in January with the Health Security Plan produced by the White House and you'll see big discrepancies on the subject of medical innovation. In his eloquent speech, the president said reform should "strengthen what is good about our health-care system--the world's best health-care professionals, cutting edge research, and wonderful research institutions." I agree. The United States is the world leader in biomedical research and innovation. At a breathtaking pace, our scientists and laboratories produce new drugs, medical devices, and surgical techniques that prolong and improve human life and reduce the cost of health care. When these new drugs, devices, and techniques enable people to remain productive instead of becoming disabled, our country's economic well- being improves; and when these same innovations replace older, more costly treatments, quality health care becomes more affordable for all. Unfortunately, many suggested health-care "reforms" would diminish medical innovation. Some policymakers, including the White House health-care task force, have recommended de facto price controls on breakthrough drugs. However, economists--liberals and conservatives alike--agree that price controls don't work. When government limits prices by fiat, producers supply less of the affected goods and services. Remember the gas shortage and blocks-long lines of cars leading to gas stations in the late 1970s? That illustrates how price controls work; it was decontrol of gas prices that eventually eased the shortage. Despite quantum leaps in technology, the search for new cures and therapies is still a risky, trial-and-error process. Development of just one new drug may require the testing of 5,000 compounds, and all these tests cost a lot of money: According to Congress' Office of Technology Assessment, developing a new drug costs a company, on average, about $359 million before taxes--about $194 million after the company takes advantage of tax breaks associated with its R&D. And it takes years to move a drug from the drawing board, through clinical tests, then government approval, to market. The companies--pharmaceuticals, biotechs, equipment manufacturers--that produce medical innovations pour billions of dollars into research and development annually. To induce investors to risk so much capital requires the possibility of reasonable profits. Price controls sharply limit profit potential and scare investors away from the "cutting-edge research" President Clinton praised in his speech. Kirk Raab, chief executive of Genentech Inc., says that, if the government imposes price controls, "my board of directors is not going to be very enthusiastic about my spending a lot of money on research on an AIDS vaccine." That investors are sensitive to regulatory changes is clear from the fact that the mere mention of drug price controls has cut the market valuation of pharmaceutical and biotechnology stocks by $120 billion. If you don't think private investment in biomedical research matters, consider this. In 1993, America's pharmaceutical companies invested $12.6 billion on R&D. That's 41 percent more than the entire budget of the National Institutes of Health. Biotechnology companies spent an additional $5 billion on R&D. Medical and surgical instrument makers and other innovators invested billions more. New, improved medical technologies enable people to live longer, healthier lives. New surgical techniques reduce pain, shorten patients' hospital stays, and speed their recovery. Fewer, shorter hospitalizations, less need for surgery, and other benefits of medical innovation reduce the cost of health care. The president is right to want "to strengthen what is good about our health-care system," namely, research. I hope the rest of his team paid attention to his declaration. So far, the evidence suggests they didn't. John M. Clymer is vice president of Americans for Medical Progress, an Arlington, Va.-based nonprofit organization whose mission is to educate the public, the media, and policymakers about biomedical research.

The Clinton Administration's Mixed Messages On Biomedical Research And Innovation

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