REPOST: The Consequences of Price Controls for Patients
2021 could be a bad year for patients in the United States.
Lawmakers have resumed their fight to pass sweeping price controls that would limit access to treatment and crush medical innovation—the same innovation that delivered COVID-19 vaccines in record time and faster than any country in the world.
Using a tricky Senate procedure called reconciliation, Senators need only 51 votes to implement Medicare price controls once the House drafts new legislation that builds off of Speaker Pelosi’s failed bill, H.R. 3, the Lower Drug Costs Now Act.
Proponents of this legislation tout billions in savings over the next decade, but usually fail to mention how many fewer drugs would come to market—up to 40, according to the nonpartisan Congressional Budget Office—and what this would mean for health plans for most Americans.
If the government negotiates drug prices on behalf of Medicare beneficiaries, pharmaceutical companies will be forced to decide whether to satisfy a below-market price or cease offering certain drugs to Medicare plans altogether.
The first scenario leaves manufacturers stranded, unable to recoup billions in research and development costs and forced to cut back or cease production altogether. The second option forces companies to sacrifice revenue from the market’s largest buyer, leading to a similar result and further reducing supply.
The catch is that “negotiation” is a misnomer. What this style of legislation really does is leverage the power of the federal government against individual companies in the private sector in order to force price concessions, “or else.” This same style of governance is used in socialist healthcare systems across the world, and it has proven ineffective.
For example, up to 95 percent of cancer drugs available to patients worldwide are also available to patients in the United States. The next closest are the United Kingdom and Japan—74 and 49 percent, respectively—and the list only declines further from there. Such a wide margin suggests that we are doing something right here in the states. It turns out that letting market forces play out, while supporting innovation and encouraging transparency, is the proper solution to lowering prices for consumers in any sector.
This model has proved itself every day during the COVID-19 pandemic. American companies shattered vaccine development records, and the federal government put taxpayer dollars behind this innovation in an unprecedented fashion and with minimal red tape. Now, we face the real possibility of achieving herd immunity this year and returning to life as we knew it.
The average drug takes 10 years and over $2 billion to reach the market, so put that in perspective when considering the price control measures being floated by Congress. In under one year, we already have vaccines approved and into the arms of millions of patients across the country. Would that have been possible without our government supporting innovation instead of standing in the way of it? Could companies have mobilized so quickly and at such a massive scale if there had been arbitrary price caps standing in the way?
Whenever the next pandemic rolls around, let us hope we never find out.
Patients win when our lawmakers support the innovators producing cures that save lives and ensure patients have access to whatever they need. In the long run, we need more cures circulating, not fewer. Price controls will do the opposite and leave us vulnerable to falling in line with other countries across the world—limited access and fewer available cures. American health would suffer, and we would fare even worse against the next public health crisis.