Price Controls for Medicines Risk Harming Innovation When Breakthrough Drugs or Vaccines May Mean Life or Death
President Trump is expected to issue an executive order today directing his administration to take a series of actions related to pharmaceuticals and the price of new medicines. Anticipated initiatives include rules addressing drug importation and pharmaceutical price controls, and a key feature of the order reportedly involves adopting an International Pricing Index (IPI) as a reference for the maximum prices drug companies may charge for their products.
Imposing price controls on pharmaceuticals may lower drug prices in the short run, but would result in sharply lower investment in medical research and development and reduce the number of innovative new medicines that reach the market in coming years, warns CEI Senior Fellow Gregory Conko:
“We may think health care is special, but medicine is not immune to the laws of economics. The high prices charged for some innovative new drugs are a direct result of the huge cost of medical innovation, testing, and navigating the complex FDA approval process. So, imposing pharmaceutical price controls will inevitably lead to less medical research and development and, as a result, fewer new drugs reaching patients in the future.
“Adopting a policy known to reduce innovation is rarely a good idea. But it would be disastrous in the middle of global pandemic, when the availability of breakthrough drugs and vaccines may literally mean life or death for millions of Americans.”
- Conko: HHS Price Disclosure Rule Will Not Make Medicines More Affordable
- Conko for Real Clear Policy: The Crushing Burden of Government Regulation