Once admired as an engine of American innovation, drug companies are now treated like Big Tobacco on Capitol Hill. The phantom drug safety crisis conjured by the Vioxx and antidepressant controversies has made the industry a piñata for Democrats like Henry Waxman and Bart Stupak.and
The stated political goal is to reduce the cost of health care so the government can afford to pay for benefits for more people, which inevitably means controlling access to new drugs. Blueprints are being drawn up for Medicare to "negotiate" drug prices by leveraging its quasi-monopolistic power or simply by fixing the prices through reimbursement. The influence of such policies will only be magnified if Democrats create a Medicare-like program open to the under-65 set.
This political ferment can't help but distort the investment decisions of companies like Pfizer, which need to balance projected profits against the cost of clinical development. Biotech medicines hold the promise of significant health benefits but come at a price, reflecting the difficulty of developing them. But if starved of R&D money -- whether through politics or industry gambles that don't pay off -- innovation will wither.