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Commentary

Guaranteed Future Pain and Suffering: The Recent Research on Drug Price Controls
Derek Hunter, Heritage Foundation, 11-3-05

Pharmaceutical price controls have been the focus of recent Washington debates about ways to tame the federal deficit. But Derek Hunter argues that they are a poisoned chalice that will dampen medical innovation for decades to come.

With the passage of the Medicare Modernization Act of 2003, the government dramatically increased its activity in the prescription drug market. Not surprisingly, as cost estimates for the Act’s prescription drug benefit soar, some in Congress are looking toward price regulation as a way to hold expenses down. Several times, legislation has been proposed that would allow the federal government to “negotiate” the prices of drugs covered by the prescription drug benefit. “Negotiate,” however, is misleading. What the term really means is government price controls.
The use of price controls to combat rising costs is an ancient prescription, and in the case of prescription drugs, one that is practiced in much of the rest of the world. No politician, over the course of 4,000 years of experience, has yet devised a humane system of price controls that spares consumers from the risks of shortages and declines in the quality of the controlled goods or services.
The negative impact of price controls cannot be overstated. While further shifting costs to consumers in the uncontrolled sector of the pharmaceutical market, price controls would also sacrifice future medical breakthroughs by stifling incentives for private research. The quality of care available to both present and future generations of patients would decline, and the costs of personal pain and suffering are guaranteed to increase. Price controls a mistake Congress should not make.

Drug prices aren’t making Americans obese or stopping them from adopting healthier lifestyles. Sickness, not pharmaceutical companies, drives health care spending. Rather than just focusing on a single line item for pharmaceuticals—which will inevitably become counterproductive—Americans need to think about how to maintain health and prevent illness. Pharmaceuticals are a major component in that effort.



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