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An International Drug Price Treaty

Unilateral drug price controls are politically destabilizing.

Eric Greenberg

The United States is facing a crisis that could undermine the foundations of its political system. At issue is how much more Americans pay for medical therapies than do the citizens of other developed countries.

We pay, on average, 77% more than wealthy Europeans and Canadians for the same prescription drugs, because our trading partners enforce strict price controls on pharmaceutical drugs. U.S. citizens are effectively subsidizing the national health care systems of foreign countries, and they are supplying nearly all the profits of pharmaceutical companies. This is unfair to U.S. taxpayers, bad for scientific research and development, and damaging to the biopharmaceutical industries.

It is also immoral. More than 40 million Americans have no primary health care, in part because it costs so much to provide drugs to an aging population that requires ever more health care. The Senateís plan to extend prescription drug benefits to the elderly may be unsustainable: the Congressional Budget Office says that it would cost $7.5 trillion to maintain such a Medicare benefit in perpetuity. The United States cannot sustain its wealth and spend more than 16% of its gross domestic product on health care.

Our trading partners are punishing Americans in another way: many drug companies are foreign owned, and they are funding their r&d and profits to the loss of our poorest citizens. This is cruel to the American aids sufferer who is denied antiretroviral drugs because drug prices are artificially high, and we cannot insure him.

In the October/November issue, I introduced the idea of a Fifth Freedom—the freedom from sickness. I believe that providing public health is the duty of government. Without a healthy population, the stability of democracy is at risk. If our loved ones are dying because we are subsidizing other wealthy nations, Americans will become angry and nationalistic. Drug pricing is therefore a matter of national security. Economic pressure is a tried method of aggression: price controls by rich nations, enacted against an unregulated U.S. market, are a form of hostility aimed at the United States and developing countries. Rich economies must share the costs of drugs equitably.

Some health care experts say drug prices are a global public health issue, not a trade issue. That is political posturing. Itís true there is some reluctance among U.S. policy makers to propose an international drug pricing treaty, but thatís because our trade negotiators worry that our unilateralism (much of it only perceived) has destroyed the international goodwill necessary to bring about a trade treaty.

The U.S. government must resolve to take serious action to remedy unilateral price controls. Sharing the costs of drugs is the only way that we will have effective international public health and global stability. I propose an international treaty to set international price controls that are fair, as we advocated last issue in Jason Pontinís essay, “Rx: Price Controls.” Without such a treaty, international political stability could be a memory.

One caveat: all wealthy countries must continue to underwrite distribution of drugs in poor and developing nations; it is a moral responsibility of humankind.

Think long and hard about this. Sickness and suffering will be the biggest destabilizing factor the world faces this century—more than terrorism itself. Join the mandate for morality and fairness.

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