The real impact of government price controls on prescription drugs
The real impact of government price controls on prescription drugs
Updated August 2, 2022
What is the real impact of government price controls on prescription drugs?
President Joe Biden and Congress are considering drug price controls as a part of the so-called “Inflation Reduction Act.” But we already have plenty of research warning that these drug price controls would:
- Result in fewer new breakthrough cures
- Reduce funding for cancer research
- Contribute toward hundreds of millions of life-years lost as a result of the drop in new drugs
Much of this research has been done by University of Chicago economist Tomas Philipson. Below is a quick list from his research that details how government price controls would affect prescription drugs — and your health care.
Government price controls on prescription drugs would result in fewer new breakthrough cures
167 to 342 fewer new drugs:
“HR3, the Lower Drug Costs Now Act, would lead to a 29% to 60% reduction in R&D from 2021 to 2039 which translates into 167 to 342 fewer new drug approvals during that period.”
– Philipson & Durie, University of Chicago, 9/14/21
A 29% to 60% reduction in R&D:
“HR3, the Lower Drug Costs Now Act, would lead to a 29% to 60% reduction in R&D from 2021 to 2039.”
– Philipson & Durie, University of Chicago, 9/14/21
That’s $663 billion less invested in R&D:
“We find that HR 5376 will reduce revenues by 12.0 percent through 2039 and therefore that the evidence base predicts that R&D spending will fall about 18.5 percent, amounting to $663 billion.”
– Philipson & Durie, University of Chicago, 11/29/21
Government price controls on prescription drugs would reduce cancer research
$18 billion less spent on cancer research per year:
“Proposed drug price controls on cancer treatments will reduce overall annual cancer R&D spending by about $18 billion per year.”
– Philipson, Ling, Chang, University of Chicago, 6/27/22
Patients would miss out on 9.4 times as many new cancer drugs as they would gain from President Biden’s cancer moonshot plan:
“The reduction in total R&D spending from proposed price controls is more than 9.4 times as large as the increase from the proposed budgetary expansion. Regardless of the level of R&D assumed needed to generate a new drug, the same proportional effects would apply to new drugs so that 9.4 times as many new drugs are lost due to price controls as gained from the budget expansion.”
– Philipson, Ling, Chang, University of Chicago, 6/27/22
Higher cancer mortality rates:
“The overall effect of the Administration’s policies affecting cancer research is to greatly reduce, rather than raise, the large amount of development activity in cancer. This would ultimately raise, as opposed to lower, cancer mortality compared to the status quo and thus be counterproductive to the Cancer Moonshot objectives.”
– Philipson, Ling, Chang, University of Chicago, 6/27/22
Government price controls on prescription drugs would contribute toward hundreds of millions of life-years lost
A loss of 331.5 million life years:
“This drop in new drugs is predicted to generate a loss of 331.5 million life years in the US, 31 times as large as the 10.7 million life years lost from COVID-19 in the U.S. to date.
– Philipson & Durie, University of Chicago, 11/29/21
An impact 27 times greater than what CBO wants you to believe:
“These estimated effects on the number of new drugs brought to market are 27 times larger than projected by CBO, which finds only 5 drugs will be lost through 2039, equaling a 0.63% reduction.”
– Philipson & Durie, University of Chicago, 11/29/21
The facts are clear: Government price controls mean fewer new breakthrough cures for patients and their families, less research on new cancer treatments, and hundreds of millions of lives cut short.
We can make prescription drugs more affordable and avoid these horrific outcomes by rejecting Washington’s drug price fixing scheme and giving Americans a personal option in health care instead.
Learn more at personaloption.com.
