Negotiating Prescription Drug Prices Would Create Supply Shortage, Opinion Piece Says

Sen. Edward Kennedy (D-Mass.) and Rep. Nancy Pelosi (D-Calif.) have criticized the new Medicare law as a "bitter pill" for seniors and have submitted their own bill that would put the government "into the game of jawboning down prescription drug prices" by allowing CMS to negotiate directly with drug makers, which "all sounds innocent," James Pinkerton, a fellow at the New America Foundation, writes in a Los Angeles Times opinion piece. However, the "problem is that it won't be a real negotiation" because the federal government "is so big and powerful" that pharmaceutical companies would be obliged to accept any prices the government offers, Pinkerton writes. He adds that with such de facto price controls in place, "medicines will be affordable -- for as long as they are available." Currently, drug makers spend $30 billion a year on research and development, but if the government forces a decrease in pricing, they might not continue to invest so heavily in product development, which would limit the production of new drugs that can "improve and save lives," according to Pinkerton. Throughout history, price controls have created shortages, which "Kennedy and his crew don't like to mention," Pinkerton writes (Pinkerton, Los Angeles Times, 3/18).