Rational Decisions and Pharmaceutical Regulation
By Arnold Kling
Today’s Washington Post contains another op-ed piece by a physician, and of course he is in favor of price controls on prescription drugs.
The pharmaceutical industry will intone its familiar mantra: The cost of drugs is a relatively small percentage of total health care costs; innovation requires investment; research-based companies need to realize an adequate return on investment; and companies often establish access programs for destitute patients. But these arguments are invalidated by the sheer magnitude of the pricing decisions, which constitute a formidable barrier to the flow of innovation from the research arena to public benefit.
My response to the last such op-ed piece still holds.
Meanwhile, Alexander Combs actually makes a constructive suggestion, which is to lower the cost of bringing drugs to market.
All new drugs sold in the U.S. must undergo a series of rigorous clinical trials in order to gain approval for sale. The pharmaceutical companies must prove not only safety, but efficacy as well. This process typically takes seven to ten years and can cost upwards of $900 million dollars per drug.
Although safe and effective medicine is a noble aim, there are unseen costs to this policy—costs which can greatly overwhelm the benefits. For every new treatment awaiting approval there are untold numbers of people who may die simply because they were denied access to it.
Combs makes his comments in light of research into decision-making done using MRI imaging to determine when people are acting rationally and when they are acting emotionally. This sort of brain science or cognitive science relates to my forecast about the future of education in the previous post.
For Discussion. Imagine a science-fiction world in which a warning light tells us when we are making decisions emotionally rather than rationally. What consequences would this have?