More Unintended Conseqeunces Of Obamacare

One thing most people are ignoring when it comes to Obama's plan for health care reform: unintended consequences. But from other countries that have implemented their own versions of Obamacare, as well as periods in our own past, we can predict that certain activities will change in the medical field, and not for the better. It is quite apparent that one thing that will be negatively affected is medical innovation and research, specifically in the area of the development of new drugs.

Scientific discoveries are neither inevitable nor predictable. What is more, they are affected, especially in our time, by forces outside the laboratory—in particular, the actions of politicians and government bureaucracies. The past quarter-century has offered several meaningful object lessons in this regard. For example, in the 1980s, the Reagan administration undertook a number of actions, both general and specific, that had a positive effect on the pace of discovery. On the general front, low taxes and a preference for free trade helped generate a positive economic climate for private investment, including in the rapidly growing health-care sector. More specifically, the Reagan administration engaged in new technology transfer policies to promote joint ventures, encouraged and passed the Orphan Drug Act to encourage work on products with relatively small markets, and accelerated approval and use of certain data from clinical trials in order to hasten the approval of new products. All of these initiatives helped foster discovery.

That which the government gives, it can also take away. As the 1990s began, a set of ideas began to gain traction about health care and its affordability (it seems hard to believe, but the first election in which health care was a major issue was a Pennsylvania Senate race only eighteen years ago, in 1991). Americans began to fear that their health-care benefits were at risk; policymakers and intellectuals on both sides of the ideological divide began to fear that the health-care system was either too expensive or not comprehensive enough; and the conduct of private businesses in a field that now ate up nearly 14 percent of the nation's gross domestic product came under intense public scrutiny.

A leading critic of Big Pharma, Greg Critser, wrote in his 2007 Generation Rx that President Clinton picked up on a public discomfort with drug prices and "began hinting at price controls" during his first term in office. These hints had a real impact. As former FDA official Scott Gottlieb has written, "Shortly after President Bill Clinton unveiled his proposal for nationalizing the health-insurance market in the 1990s (with similar limits on access to medical care as in the [current] Obama plan), biotech venture capital fell by more than a third in a single year, and the value of biotech stocks fell 40 percent. It took three years for the 'Biocentury' stock index to recover. Not surprisingly, many companies went out of business."

Actions have consequences, something the Obama Administration has not yet learned. If President Obama has his way, the fallout could include a big drop in R&D in medical and pharmaceutical fields. New discoveries would cease and 'state of the art' medical treatments would quickly become 'status quo' treatments. That does not bode well for any of us.