Issue in Focus
Mar 15 2019
America has a health care spending problem.
As a nation, we spend double the amount that other developed nations spend on health care and yet our life expectancy is lower than that of many developed nations. Already health care makes up 25% of all federal spending, and in a decade it will make up 33% of all spending. Almost all of our future deficits could be eliminated if we brought health care spending under control.
And of the many reasons health care spending is so high in the United States, almost all of them have to do with excessive government regulations and price controls.
Take insulin, a drug that was invented in 1921, but which American diabetics are paying double for now than what they were paying just 10 years ago. The problem isn’t that companies don’t know how to make insulin; after all, they’ve been making it for almost 100 years. The problem is that the Food and Drug Administration process for approving new generic versions of insulin is much more expensive than it is for other drugs. And it’s worth noting that the FDA process for approving all generic drugs is also generally far more expensive here than in other countries.
As a result, just three pharmaceutical companies manufacture insulin in the United States, and they use every tool at their disposal to make it harder for new generic competitors to enter the market. By using federal law to limit competition, these companies are able to charge far higher prices in this country than their foreign competitors charge in other countries.
It doesn’t have to be this way.
We can begin to bring these high drug prices down for American consumers by lifting some of the bureaucratic red tape that strangles competition. That is why I helped introduce the Short on Competition Act with Sen. Amy Klobuchar (D-MN) this week.
The Short on Competition Act would empower the Secretary of Health and Human Services (HHS) to temporarily allow importation of drugs in markets where there are fewer than five competitors and the FDA has approved a drug’s sale for more than ten years. Eligible countries from which the United States could start importing affordable prescription medications under this bill include Canada, Australia, Japan and members of the European Union.
On its own, this bill is not a comprehensive solution for rising health care costs, but it is a good first step that will demonstrate how lower government regulation and increased competition can help American patients.