ANOTHER DODGED BULLET

Interesting and completely predictable piece in the New York Times today about the soaring costs of prescription drugs. The estimate of drug costs from all sources for the elderly in 2010 just went up by 23 percent. The costs for this year have been recalculated to post an increase of 7 percent. These kinds of statistical adjustments mean something quite simple: no-one has a clue what’s going to happen to drug costs in the next decade, but you’d be a fool if you think they won’t sky-rocket. Anyone who’s had a close look at what’s going on in pharmaceutical research will tell you that the potential for new breakthroughs is extremely high and the demand is limitless. Guaranteeing, as Al Gore would have done, a fat new entitlement on these grounds would have guaranteed us higher taxes and big deficits well into the future. And somehow I don’t think that every time the scheme was mentioned in the New York Times, it would have appended to it – the ‘enormous new entitlement heavily biased toward the wealthy.’ Bush has committed himself to something less onerous – but still a budgetary nightmare. He should start talking up these soaring cost numbers to keep the program as modest as possible. Or better still, drop it altogether.