Tucked away in a piece about possible end runs around NICE, the health care rationing body, is something of a scary paragraph:
Pharmaceutical companies are reluctant to launch new drugs in the UK at low cost because 25% of the global market is influenced by the UK price.
No, not that one sentence, although it helps explain why this next one is scary:
It comes at a time when other countries are actively considering setting up equivalents to Nice. First among them, and most important for the pharmaceutical industry, is the US. President Obama is known to be interested in some sort of cost-effectiveness scrutiny of medicines, which is bitterly opposed by the industry.
What all too few seem to understand is that medical innovation is hugely driven by what happens in the US market. The only market that is largely free from price controls. We can see from the first sentence that price controls do indeed retard innovation but of course there is no outcry about this for we don’t normally see it. Who does take note of cures that aren’t invented, aren’t launched, because price controls mean there is no profit in their being so?
The great release from this problem for European health care systems has been that the US market, by far the largest in the world, is not subject to such price controls. Thus 300 million of the richest people on the planet underwrite, through the prices they pay for new treatments, the developments that we get years later as prices drop.
If the US does indeed bring in some form of NICE equivalent, some form of price rationing, then medical innovation will fall….no, not cease completely, simply there will be less of it than there would otherwise have been. Thus people who could or might have been cured will not be and they will die.
Reform of the US system might still be worthwhile, something like NICE might even still make sense: but don’t anyone believe that such changes will be costless, they will indeed cost lives.