Friday, November 10, 2006

So it begins:

Democrats are wasting no time informing Americans about their plans to fight the invisible hand of capitalism. Harry Reid is already on the attack, stating he plans on going after the drug companies to get them to lower their prices.

Now I’m not saying they won’t be successful in getting drug prices lower but what people should consider is the reaction to his action. Drug companies have been producing drugs to allow us to live longer because of the reward that goes with the risk. Companies like J&J spend over $6 billion a year in R&D in hopes to find that one drug that will not only make back the $6 billion but also a decent return.

What happens when the government looks to put price controls on the system, companies will answer by lowering R&D. This means the pace of new drugs will slow making it more difficult to find cures for things like cancer and AIDS.

We should all refresh our memory with what happened when President Clinton intervened in the market for flu vaccines. The American companies that were producing the drug left the market because it was no longer profitable. America was then forced to import our flu vaccines, which consequently led to a shortage in 2004 when that company, Chiron, had their license suspended by the British government.

Cheap drugs might sound good but don’t expect companies like Pfizer to go out of their way to spend billions on new drug development if Reid is not going to let them profit from it.

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