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Lott's mischief would add costly burdens on insurance companies
Lott's mischief would add costly burdens on insurance companies
Clarion Ledger
By Peter Pitts
June 6,2007
NEW YORK — Populism continues to pay dividends at the polls, but the promises made under its guise rarely come true. Just look at U.S. Sen. Trent Lott's two latest battles.
Since losing his beachfront home to Hurricane Katrina two years ago, Sen. Lott has become the insurance industry's top critic in Congress. On May 21, when speaking about insurance companies, Sen. Lott promised "to kick their fanny" until his "last day on Earth."
Katrina was certainly devastating. But in this case, Sen. Lott seems more interested in pursuing a personal beef with his insurance company than in truly helping those afflicted by the storm. In fact, his calls for new regulatory burdens on insurance companies would inevitably lead to higher prices for consumers.
So much for helping the common man.
The same can be said of Sen. Lott's disgust with the pharmaceutical industry. In recent weeks, it's reached a fever pitch.
As with the insurance industry, he's personalized this battle too, saying, "I can no longer explain to my 90-year-old mother why her medications cost more than the same drugs from other countries."
True, Canadians and Europeans pay lower prices than Americans for name-brand drugs. But that's because their governments impose price controls. In the long run, such anti-market policies exact a much steeper, if less obvious, toll on consumers.
Limited supplies and rationing are natural consequences of price controls. All too often, foreigners face long delays for the treatments they need. There simply isn't enough medicine to go around.
But even if we assume that foreign markets will have enough drugs to export their leftovers back to the United States, it's not clear that importation will save U.S. consumers any money.
The nonpartisan Congressional Budget Office estimated that total savings from importation would be about 1 percent of total spending on drugs over 10 years. This is because most benefits from importation would actually flow into the pockets of middlemen, not consumers, as a London School of Economics study recently confirmed.
And these economic consequences don't even take into account the safety risks associated with imported drugs.
According to the World Health Organization, as much as 10 percent of today's global medicine supply chain is counterfeit. And the U.S. Food and Drug Administration has reported that in some countries, that figure jumps to 50 percent or higher.
Moreover, terrorists have already proven that they are adept at exploiting weakened chains of pharmaceutical custody. In fact, the federal Joint Terrorism Task Force recently reported that a global terrorist ring with ties to Hezbollah is importing counterfeit drugs into the United States by way of Canada.
Nonetheless, like any good populist, Sen. Lott has threatened America's drug makers. "I'm telling pharmaceutical companies to address the overall rising cost of their products," he has stated, "or the federal government will, and it won't be pretty."
When it comes to government intervention with pharmaceuticals, Sen. Lott is certainly correct when he promises that it'll be ugly. But that's because America will open its borders to an influx of potentially unsafe or counterfeit drugs from around the world - with dubious cost-savings for consumers.
Like too many others in Washington, Sen. Lott appears more interested in settling personal scores and claiming to stand up for the little guy than in actually pursuing wise policies.
With such mischief, Sen. Lott is doing little more than strengthening his own political status at the expense of the American insurance-buying and healthcare-consuming public. What a shame.
Peter Pitts is president of the Center for Medicine in the Public Interest and a former associate commissioner of the U.S. Food and Drug Administration. Write him at 52 Vanderbilt Ave., New York, NY 10017. |
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