National Post

How America's Healthcare Debate Affects the World—David Frum

In my column for the National Post, I explain how American healthcare reform influences government decisions in Europe and everyday lives in the developing world:

The American healthcare debate is not a debate for Americans only. In two ways at least, the debate implicates the well-being of everybody in the developed world.

The first implication: medical innovation.

The profit-seeking American healthcare system is always looking for new products to sell: new drugs, new surgical procedures, new ways of delivering care. The result is that the United States has become the leading — often, the unique — source of progress in the treatment of disease.

Just one example out of many: Through the 1990s, at least as much prescription drug research was done in Europe as the United States. But as European governments cut back on the price they were willing to pay for drugs, European pharmaceutical research shrivelled. Since 1997, American labs have out-produced European labs by a margin of two to one.

New drugs are expensive, because the sale price must recoup not only the cost of manufacturing the pill, but also the years of research and development before a single pill was made. American consumers pay this full price. In Canada and Europe, however, government healthcare monopolies can use their market muscle to force discounts. Soon enough, the patent expires, and generic manufacturers cut the price even more radically.

But everything rests on that first decision by the American drug consumer to buy a new product at a high price. If changes in U.S. health policy stunt American drug development, it is not only Americans who will suffer.

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