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The Biden administration’s “infrastructure” spending plan may call for dusting off a bad idea that, when last proposed in 2019, the Senate rightly rejected: drug price controls.
Of course, price controls on prescription drugs have nothing to do with infrastructure. But this is also bad policy, resting on the faulty assumption that quality, affordable health care can be simply mandated into existence by government fiat.
Such policies rarely work the way they’re intended. Drug price controls result in drug shortages, lower research and development spending by pharmaceutical companies, fewer drugs reaching the market, and longer wait times for drugs that do.
How do price controls work — and what affect would they have on our ability to get the medications we need?
The United States has fully vaccinated over 81 million people, around a quarter of the population. Canada, meanwhile, has fully vaccinated just shy of 1 million people, a little over 2.5 percent of its population, meaning our northern neighbor is far behind much of Europe and South America.
Canada’s vaccination effort has been so disorganized that the U.S. Centers for Disease Control and Prevention now cautions Americans against travel to the country.
Canada didn’t get here overnight. Its lackluster vaccination effort is the result of longstanding policies that put the country at a stark disadvantage when it needed to procure shots.
Canada’s price controls are, in part, the culprit. They made it difficult for companies to ship the vaccines provided by Operation Warp Speed.
In effect, Canada priced itself out of the market for lifesaving shots.
That raises a question: Why was Canada so heavily reliant on the United States for vaccines? Again, price controls were part of the problem. Drug companies have been leaving Canada for decades because of its harsh regulatory environment.
To study how Canada’s price caps hollowed out the country’s pharmaceutical industry is to understand why the same policies would result in failure in the United States.
America’s large, resilient, and endlessly innovative pharmaceutical industry deserves credit for producing the drugs, therapeutics, and of course, vaccines we need to recover from the COVID-19 pandemic.
Unfortunately, the drug price caps called for in the president’s “infrastructure” package would make it more difficult for these companies to bring these medical marvels to market.
We’ve been here before. This same policy was proposed in 2019 by House lawmakers. The White House Council of Economic Advisers warned against implementing it, finding that:
In short, price caps on drugs would not only have a disastrous effect on America’s drug companies, but on every American in need of care, too.
Thankfully, there are better alternatives.
Creating additional barriers to medical care, we know, doesn’t work.
A smarter approach would be to give Americans a personal option for prescription drugs that creates a greater supply of available medicines. Lawmakers could do this in a few ways, including:
Tell lawmakers we don’t need a federal takeover of medicine. Americans need a personal option that puts patients first. Sign the petition.