The main problem with the Patient Protection and Affordable Care Act (PPACA) is that in order to extend healthcare to all citizens as a right the law undermines the fundamental free market basis (or what remains of it) of the entire U.S. medical system. Under PPACA, in every interaction between patients, doctors, insurers, manufacturers and researchers, the incentive to control costs and provide better service is replaced with the decree to do so. When the Affordable Care Act passed through Congress, Nancy Pelosi famously remarked that universal healthcare -- socialized medicine -- was becoming a reality "after 100 years of trying." It will be interesting to see therefore, whether the next 100 years of government-directed medical technology will compare favorably or otherwise with the dizzying advance of medicine during the last 100 years.

Today, ninety-five percent of the new drugs coming on the market are developed for sale in the United States. For years, according to a study in Nature Reviews Drug Discovery, pharmaceutical companies in Western Europe have been introducing new medicines in the U.S. before introducing them in their home countries; typically by eighteen months. This is due to regulation of drug prices in Europe that makes recuperation of R&D costs (a very high 20% of revenues in the pharmaceutical industry) impossible there. Consumers in Canada and Western Europe enjoy a free ride, buying drugs at much lower prices and thereby not contributing to the R&D costs which we in America pay. Countries like China, Russia and India essentially ignore intellectual property rights altogether and develop "knock-off" drugs with no compensation to the developer whatsoever.

This cost to the American consumer does not come without a benefit. Americans are the first to have drugs like AZT, Cimetidin, tPA and new cancer drugs. The benefit is not limited to medicines. Medical devices used for everything from medical assaying for disease tests, to high technology tools used in open heart surgery, to the latest MRI equipment are also available earlier and in greater volume in the U.S. Consequently, the cutting edge of medicine is in the U.S. and the chances of surviving a serious disease are far greater here. To give one well-known example, if you are diagnosed with cancer in the United States, you will live two years longer (on average across economic class and all cancers) than if you are diagnosed with cancer in Western Europe.

What happens when 300 million consumers of medicine and medical technology are replaced by one consumer, the government, and drug prices are regulated here?


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