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Pharmaceuticals are the best bargain in health care. Here's why:

- The American people spend only 5 cents out of every health care dollar on prescription drugs. Because drug therapy helps lower health care costs in all other areas, this is money well spent indeed.- For many ailments, drugs are the most cost-effective treatment. Treating ulcers with medicine, for example, costs between $200 and $500 a year, while surgery to correct the same condition costs more than $24,000.

- According to a recent study, in the past 50 years pharmaceuticals saved more than 1.5 million lives and $140 billion in treating just four diseases - tuberculosis, polio, heart disease and stroke.

- The research-based pharmaceutical industry is currently developing 262 drugs to treat seven diseases that cost, in financial terms alone, $379 billion a year: osteoporosis, diabetes, depression, arthritis, Alzheimer's disease, heart disease and cancer. If we can come up with an effective treatment for just one of these diseases, billions of dollars will be saved, as well as untold grief and suffering.

Drug prices have risen because the drug discovery, development, manufacturing and marketing process is costly and because the newer pharmaceuticals are more complex, more sophisticated and more expensive to develop and manufacture than their predecessors.

The cost of developing a drug, according to a 1990 Tufts University study, is estimated at $231 million - more than four times the cost estimated in a 1976 study.

The industry's profits, which have remained relatively stable since 1982 according to Commerce Department figures, reflect the undeniable fact that the industry is engaged in high-risk endeavors - only one in 5,000 compounds screened makes it to market.

Profits attract investment, and investment funds research and development. The research-based pharmaceutical industry invests 17 percent of sales in R&D - more than four times the rate of other industries. This commitment to research will result in future breakthrough drugs; the benefits to society will be priceless.

The proposals advanced by Senator Pryor would clearly dampen the incentives to innovate, to the detriment not only of patients and of the industry but of the U.S. economy and U.S. competitiveness overseas, where the pharmaceutical industry is one of the few bright spots. The bottom line would be fewer breakthrough medicines, higher overall health care costs and a weaker economy.

Fortunately, there are several steps we can take to make prescription medicines more affordable without hurting innovation:

- Streamline the drug approval process. The average cost of getting a drug onto the U.S, market could be cut substantially if clinical testing and FDA review times were reduced to the level of those of major European countries like Britain.

- Reduce patent piracy. U.S. research-based pharmaceutical companies lose about $5 billion a year to international patent pirates who copy their drugs without permission. That loss drives up prices.

- Cut product liability costs. The high cost of protecting against the possibility of huge, unreasonable jury awards in product liability cases adds millions to drug development costs and pushes prices up. A reform of the tort system would help make medicines more affordable.

There are also some things individuals can do to cut their own prescription drug costs:

- Consider insurance plans that cover prescription medicines.

- If you have a chronic illness that requires using a prescription medicine over a long period, ask your doctor to prescribe a larger quantity to help cut costs.

- Shop around, compare prices and choose the pharmacy that gives you the best value for your money.