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Commentary

U.S. Consumers Shafted by European Price Controls
James K. Glassman, Scripps Howard News Service, 10-25-05

Glassman reminds us that while the U.S. spends over twice as much per-capita on health care as other OECD (Organization for Economic Cooperation and Development) nations, the U.S. also pays a disproportionate share of the costs of developing new health care technologies because of price controls used by other developed nations.

The United States can demand that other developed countries put an end to their practice of free riding on American innovation. No wonder France, Germany and Japan can keep health care costs so low. They let U.S.-based companies spend the vast sums required to get a drug approved for the market (an average of $1.3 billion in 2003) and then use price controls and other anti-competitive devices to avoid paying the cost.

The free ride is really, however, an illusion. Many new technologies and new drugs are deployed more slowly in Europe than in the U.S., and European patients pay the price as a result. Biopharmaceutical investment has also shifted from Europe to the U.S., bringing with it many high-paying jobs and billions of investment dollars.

But Glassman’s underlying point is very well taken: decrying the costs of American health care ignores the fact that we are footing a disproportionate share of the bill for the world’s good health.



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