CAGW Report: Price Controls on Pharmaceuticals Would be Disastrous | Citizens Against Government Waste

CAGW Report: Price Controls on Pharmaceuticals Would be Disastrous

Press Release

For Immediate ReleaseContact: Curtis Kalin 202-467-5318
November 1, 2016 

(Washington, D.C.) – Amid widespread assertions by officials at the Centers for Medicare and Medicaid Services (CMS) that the rising cost of prescription drugs should be dealt with through government intervention, Citizens Against Government Waste (CAGW) today released an in-depth issue brief, “Pharmaceutical Price Controls: A Prescription for Disaster,” which analyzes why price controls would be ineffective at reducing prescription drug costs and harmful to long-term research and development.  The report reviews how price controls have been used historically and the havoc they cause in the market, whether it was the Babylonian Code of Hammurabi in 2150 BC, those imposed by our nation’s earliest colonists in the 1600s, President Nixon’s wage and price controls in the 1970s, or current efforts to impose them on pharmaceuticals.

The report warns that price controls are a temporary measure and always have unintended adverse economic repercussions.  At best, price controls have a subversive impact as suppliers evade them and set up black markets; at worst they have a disastrous impact, causing shortages that are incurred by the controls themselves.

Price controls, if implemented in the United States, would do enormous damage to research and development, not only here, but around the world.  Promising therapies would never be discovered, leading to a shortage of life-enhancing or life-saving treatments, especially for chronic diseases that are difficult to conquer, such as Alzheimer’s and cancer.  When other countries utilize price controls, the U.S. pays the true costs for biopharmaceutical innovation.

“While it is understandable that patients and politicians react negatively to high drug prices, the best and fastest way to lower prices is by encouraging vigorous competition,” said CAGW President Tom Schatz.  “The report discusses several ways competition can be encouraged, such as reducing Food and Drug Administration approval times for both research-based and generic pharmaceuticals by implementing best practices, speeding up clinical trials by utilizing modern scientific tools and methods such as biomarkers and surrogate endpoints, and getting patients more involved in the approval process to help determine desired benefits and tolerable risk.”

“Too often, the other side of the ledger regarding drug prices is ignored:  Money and lives are saved when a patient does not have to go to the hospital or visit a doctor’s office due to the use of pharmaceuticals.  Competition will not only drive down drug costs, it will lead to more innovation and more therapies that will be good for everyone,” Schatz concluded.

Citizens Against Government Waste is a nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government. 


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