Document Type

Article

Disciplines

International Law

Abstract

The pharmaceutical industry has driven medical advances to unprecedented levels this century. Polio, smallpox, and tuberculosis affected nearly every family just a few decades ago, but are now all but wiped out.' Results like these are the holy grail of an effective health care system. But to obtain these results brings about a fundamental paradox: better health care must always cost more. Every person who would have died from smallpox or polio but for their vaccination lives on, eventually developing new maladies that require more treatments. The cycle continues into old age, where medical expenses are the highest. Thus an increased life span necessitates more resources directed to health care. The paradox is that if medicine is effective (i.e. if it helps people survive a life-threatening illness), that person will need a lifetime of medical care because they did not die. Thus cost alone is never an accurate measure of health care effectiveness or efficiency.

These ever-increasing costs bring about calls for government controls of pharmaceutical prices. Patented pharmaceuticals typically command the highest prices since they are insulated from direct competition. Concerns are greatest when pharmaceutical prices are high and substitute treatments are limited, tending to pit patients' health against drug company profits. Part I of this paper explores the legal implications of a direct price control system in the U.S. Part II provides an overview of the American pharmaceutical industry, and Part III critically explores several foreign price control systems. Part IV compares drug price, availability, and industry innovation between the U.S. and several of the countries reviewed in Part III. The paper concludes that the immediate financial savings to consumers from limiting the price of existing pharmaceuticals will substantially reduce the industry's incentive to innovate future advances, and its ability to fund research at current levels.

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