(Washington, D.C.) – Citizens Against Government Waste (CAGW) today released its latest Through the Looking Glass special report, “Price Controls on Drugs: Hazardous to Your Health,” on why price controls would be ineffective at reducing prescription drug costs.  The report reviews how price controls have been used historically and the havoc they cause in the market.  It also points out that the current Clinton-Gore drug proposal would use price controls to keep prices down and argues it should be rejected by Congress.  Instead, Congress should adopt the model proposed by a majority of the Bipartisan Commission on the Future of Medicare to modernize Medicare and provide seniors a prescription drug benefit.

“The Clinton-Gore proposal is too expensive — $338 billion over 10 years — and will not solve the basic problems with Medicare,” CAGW President Tom Schatz said.  “While the administration and their supporters claim their bill would not result in price controls, it most definitely will.  History has shown that price controls do not work and they won’t work in this instance either.”

According to Schatz, “The Clinton-Gore Administration’s proposal to control drug prices is inspired in large part by Canada’s healthcare system and their inexpensive drugs.  But Canadians have to contend with long waiting lists to see specialists, limited medical technology, and delays in getting surgery. 

Even more onerous, Canadians often do not have quick access to important, new breakthrough drugs."  

CAGW warns that price controls are a temporary measure and always have unintended 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.

“ A majority of the president’s Bipartisan Commission on the Future of Medicare believe the Federal Employees Health Benefit Plan (FEHBP) is a great model in which to modernize Medicare,” Schatz said. “Every health plan in FEHBP provides prescription drug coverage.  If FEHBP is good enough for the president, the vice president and Congress it should be good enough for our seniors.”

The report is available at:  www.cagw.org, under “What’s New?”

CAGW is a nonpartisan, nonprofit organization with over a million members and supporters, dedicated to eliminating waste, fraud, mismanagement, and abuse in government.