Price Control Schemes Threaten the Health and Well-Being of People Who Rely on Lifesaving Medicines
There are proposals being floated in the nation’s capital that would institute elements of socialized medicine into America’s health care system in an attempt to lower the prices of prescription drugs. If implemented, these ideas would limit the access that Americans have to cutting-edge treatments and cures and reduce the funding available to develop lifesaving drugs. Free markets are the best method to arrive at pricing for any product however plans under consideration would instead tie what American consumers pay for drugs to caps in countries with national health services that artificially suppress prices. The unintended consequences of these price-fixing schemes will be grave for those who need or may one day need lifesaving medications.
Pharmaceutical firms invest tremendous amounts of time and money in the development of a single product, many of which never make it to market. It takes up to 12 years to develop a drug at a cost of between $1 and 2.6 billion. Each project involves huge monetary risk but when successful, the result might be a medication that adds productive years to peoples’ lives. Forcing drug companies to adhere to artificial pricing schedules will cripple medical innovators by reducing the funds available for research and development. It will also lead to diminished access to the newest medicines for Americans. People in the United States currently have access to 89 percent of cutting-edge drugs. Other countries that have enacted price controls such as Germany, Switzerland, the Netherlands and Singapore have access rates that are 62 percent, 56 percent, 48 percent and 29 percent respectively.
However, not just people in the U.S. but patients around the world will feel the effects of the proposed pharmaceutical price ceilings. Currently, Americans shoulder a disproportionate share of the pharmaceutical price burden – six times more on average than the rest of the world. However, this also means that changes the United States makes to pricing will have an outsize impact on the research and development money available for future medical innovation. Everyone will potentially suffer the effects of the lifesaving medical innovation that never happens because of diminished R&D dollars.
Instead of imposing additional regulations on the pharmaceutical industry, it would be more effective if the government carefully reviewed the current regulations that add to the expense of drug development. Pharmaceuticals are often delayed by constantly changing requirements increasing production costs and leading to higher prices. Smart regulatory reform would enable pharmaceutical companies to develop drugs faster and less expensively allowing them to market their products at lower prices.
Restricting the pharmaceutical industry through price caps will undermine life-enhancing health care discoveries. Allowing a price ceiling on drugs sets a dangerous, anti-free market precedent that could lead to price limits on other products down the road. IPI proposals are short-sighted solutions to the problem of rising health care costs that could have an adverse impact on lifesaving innovation for Americans and the rest of the world.