Congress Should Listen to Economists and Reject Price Controls

In December of last year, NTU organized a letter signed by more than 150 economists warning the federal government of the perils associated with setting price controls on prescription drugs.

The letter stated:

Implementing a reference pricing system in the United States would create price controls that bring with them the same types of harms these policies have caused in foreign countries, to the detriment of the health care system at large and investments in U.S. research and development. History has shown that price controls on any commodity or service produce unintended but consistently detrimental effects.

Unfortunately, a recently introduced bill would ignore this warning. Senator Rick Scott (R-FL) has sponsored S. 977, which would base the cost of drugs in the United States on the prices in Canada, France, the United Kingdom, Japan, and Germany. Some free-market proponents have already warned that this bill could limit patient access to lifesaving drugs and reduce innovation.

There are many things that Congress can and should do to reduce prescription drug costs and help patients gain access to the medication they need. These solutions involve reducing, not increasing the role of the federal government. Unfortunately, S. 977 moves in the wrong direction and fails to heed the advice of economists.