Government Price Controls on Prescription Drugs Harm Patients

More than 150 economists have signed a joint letter organized by the National Taxpayers Union to the Department of Health and Human Services in opposition to its proposal to link government reimbursements for certain Medicare drugs to a foreign price index to establish domestic drug prices. This concept, tantamount to importing foreign price controls, would be bad for patients and taxpayers, leading to drug shortages and stagnant innovation.

In the letter, the economists write,

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.

A new issue brief from NTU President Pete Sepp details numerous ways to address drug prices -  streamlined regulations for the Federal Drug Administration as well as implementing better oversight over government health programs that artificially increase the prices for prescription drugs. In another example from the analysis, Sepp writes,

Value-based health care has more potential than any other model for delivering what free-market public policy advocates have long sought: stronger patient-provider relationships, consumers empowered with decision-making over how to deploy resources, limited government interference in the evolution of services, and nimble programs capable of embracing evidence-based results... This will foster an organic fiscal responsibility that is far more durable than complex rules, price controls, or rationing.

To speak with NTU President Pete Sepp, who helped organize the economists’ letter and has proposed real solutions rather than foreign price controls, please contact NTU Vice President of Communications Kevin Glass at 703-299-8670 or at