In a well-publicized campaign appearance, vice-President Gore took a busload of senior citizens across the border into Canada, where it was revealed that several drugs there were less expensive than they are in the United States. This is because the Canadian government imposes a strict program of price controls on pharmaceuticals. What the Gore campaign did not tell those seniors is that most prescription drugs in Canada are the same price, if not more expensive, than drugs in the United States. Moreover, according to the National Center for Policy Analysis, because of price controls, many drugs are not even available in Canada.
The first part of Gore's reform package-extending prescription coverage to Medicare, is fraught with problems. The Medicare system is already heading toward bankruptcy, and further costs would only exacerbate this trend. In order to prevent bankruptcy, the government would have to raise taxes. And since Medicare is funded by payroll taxes, instead of income taxes, this means that every family's taxes would increase. For poor families, this could mean a substantial drain on their finances. Moreover, a large payroll tax increase could potentially lead to an economic downturn, hurting poor families even more.
The second part of Gore's reform package-negotiating price discounts, would also be disastrous in the long term. One reason for the high cost of drugs is the fact that most countries have some sort of price control on drugs. This forces companies to pass on the costs of those controls onto countries without price controls. So if we were to massively decrease drug costs-voluntarily or not-those costs would be passed on to other countries and increase costs there. Another reason that drug prices are so high is because of the sheer cost of development. According to the National Center for Policy Analysis, the average cost of development for a prescription drug is $600 million. Also, according to the Pharmaceutical Manufacturer's Association, it costs about $359 million per drug for the FDA approval process. A large decrease in prices would force pharmaceutical companies to reduce their budgets, which would mean that some avenues of research would not be pursued. In short, massive price decreases would prevent drugs from being developed which could save thousands of lives.
While Gore's prescription drug reform sure sounds good, he has forgotten that there's no such thing as a free lunch. The costs of his reforms are simply to onerous for Americans to bear.