122 C Street N.W., Suite 700, Washington, DC 20001
May 9, 2025
Dear Member of Congress:
On behalf of National Taxpayers Union (NTU), America’s oldest national-level taxpayer advocacy organization, I write to provide a timely—and timeless—reminder from the economics community as both Houses of Congress proceed with this year’s budget reconciliation effort: price controls are not a viable solution for reducing long-run taxpayer costs in federal programs like Medicaid or Medicare.
Reportedly, some members of the executive and legislative branches are considering a form of price control known as “Most Favored Nation” (MFN) for prescription drugs administered via the Medicaid system; a similar proposal for Medicare may be forthcoming. Economists knew this well-trodden policy path of “reference pricing” when it was proposed in 2018-2020 for certain Medicare prescription drugs, both as MFN and as an “International Pricing Index (IPI).
In 2018, NTU organized a statement signed by more than 150 respected economists warning:
“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.
“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.”
A full copy of the 2018 economists’ statement is attached to this letter. NTU urges you to remember their words of caution as you deliberate Medicaid’s rising and unsustainable costs. Better solutions exist for restoring this program to its original, vital purpose of providing quality health care to vulnerable and low-income Americans. More details on approaches to making Medicaid work better for patients and taxpayers may be accessed online:
House Republicans Shouldn’t Believe the Medicaid Scare Tactics to Slow Tax Relief
Price Controls: How to Make Medicaid Worse Without Really Trying
Other information on Medicare is available at ntu.org. Should you have any questions, feel free to contact us. Thank you for your consideration.
Sincerely,
Pete Sepp, President