The United States is the last industrialized country where drug manufacturers are allowed to set prices without government interference. The pharmaceutical industry earns half of its revenues and most of its profits in the United States — profits that it says are essential to pay for drug research.

So, it would appear that medicines are cheaper in many other companies due to price controls rather than market factors. History has proven time and again that price controls lead to reduced supply. I read an article last month that stated over 20 of the top 25 medicines are from American companies (it was 22 or 23 of the 25, if memory serves). New research and development has almost completely dried up in most countries. So, if we implement price controls on American drug companies, who will be left to develop the new medicines like antibiotics needed to counter increasingly resistant strains of bacteria?

While no one likes paying more for medicine, what appears to be happening is that American consumers are being forced to effectively subsidize other countries price controls. Developing and bringing new medicines to market is tremendously expensive and time consuming. If the price controls of other countries prevent them from paying for their share of the R&D costs, who's left to pay for it? Care to look in a mirror?

From the June 17th column by economist Thomas Sowell:

Some politicians say that the government can "bring down the costs" of prescription drugs or of health care in general. But they won't bring down the costs by one cent. What they can do is impose price controls -- and price controls have a centuries-long track record of creating worse problems than they solve.

Rent control has led to housing shortages in Europe, Asia, Australia and North America. Price controls on food have led to hunger in 17th century Italy, 18th century India, 20th century Russia -- and in many other places and times.

When politicians talk about bringing down the cost of prescription drugs they are exploiting a widespread confusion between prices and costs. Prices are not costs. Prices are what pay for costs -- and if you don't pay those costs, you are not going to keep on getting what you want.

The cost of creating a single new medication runs into hundreds of millions of dollars. You can play all the political games you want with prices, but if those hundreds of millions of dollars are not paid for, don't expect people to keep investing that kind of money to develop new drugs to deal with cancer, AIDS, Alzheimer's, and all the other afflictions of human beings.

That money comes from pension plans that millions of people pay into, as well as from banks and other investment sources. Politicians can always find ways to chisel these people out of their money in the short run but the public will pay in the long run.

Fewer new drugs mean needless suffering, disability, hospitalization and premature death. Higher hospitalization rates alone can wipe out savings from lower drug prices. Paying the mounting costs of medical care has turned into a shell game, where everyone tries to get someone else to be stuck with these costs. But these costs are not going away.