Soon both parties will be offering major legislation designed to address prescription drug costs, almost certainly rekindling proposals to set prices through caps, greater government negotiation powers, punitive taxes on producers, or foreign price indices. The latter proposals would let the government decide how much to pay for drugs based on what socialist countries pay.
National Taxpayers Union urges Congress to avoid these approaches. The United States has been able to rapidly fight the COVID-19 pandemic because our healthcare system provides a balance of innovation, access, and affordability not found anywhere else in the world. It is a mistake to tie our nation’s drug pricing to socialist healthcare systems. History shows that price controls destroy the incentive to innovate. This will, in turn, reduce Americans’ access to lifesaving drugs, hamper our nation’s ability to respond to future healthcare crises, and in the long run burden taxpayers with more expensive treatments such as surgeries and long hospital stays.
In fact, more than 150 economists penned an open letter to policymakers, calling on them to reject dangerous foreign price controls. The letter was originally addressed to U.S. Department of Health and Human Services Secretary Alex Azar but applies to current public officials now just as well.
The letter states:
“In this case, price controls can lead to a reduction in patient access to certain drugs, less investment in the research and development of new drugs, and cost-shifting that raises the prices of other therapeutics. Ultimately, patients will suffer as cures are delayed or entirely undeveloped, while taxpayers will be denied potential savings from drugs that could obviate more expensive treatments in government healthcare programs, and the investment of capital in development of new medicines.”
In short, policymakers should reject price controls and instead pursue alternative market-based approaches that would lower prices, expand access, and encourage more innovation. Recently NTU offered a pro-taxpayer blueprint for prescription drug policy that could help Congress develop such approaches.
To speak with NTU President Pete Sepp on new drug price control proposals, please contact Kevin Glass, NTU Vice President of Communications, at 703-299-8670 or at [email protected].