Price Controls Are Bad Medicine

There is a very good article in Forbes Online today.

A Price Control By Any Other Name

What is a price? A price communicates so many market variables that it is impossible to explain all of the information. But let's give it a try. One, how much risk there was for the manufacturer to research and develop the medicine. Two, how much risk is there the manufacturer will be sued by overzealous trial attorneys. Three, how much money does the company have to give up to sell products in Canada and other countries. Four, how can the company recover all the development costs for medicines that do not work.

If the US Government puts price controls on medications, expect that to be the end of R&D and new drugs to fight disease. While we might be able to get existing drugs cheaper, we won't get many, if any, new ones. There is not enough incentive for companies to take the risk. As it is, US consumers are funding most of the R&D since companies are forced to sell below market prices to most other countries.

While lower priced drugs sound like a good idea, there will be consequences.