Hillary Clinton wants to impose government price controls on medicines. Such efforts are certain to backfire.
Below, Galen Institute president Grace-Marie Turner shows how price controls smother innovation and distort treatment decisions. To truly help patients, she urges lawmakers to decrease drug costs by spurringcompetition.
Clinton Drug Plan
By Grace-Marie Turner
Democratic presidential candidate Hillary Clinton has piled bad new
ideas on top of bad old ideas with her plan to try to lower
prescription drug prices in America.
Her plan to rein in prescription drug costs involves forcing
pharmaceutical companies to meet a government quota for investing in
research, denying companies tax breaks for consumer advertising, and
capping out-of-pocket expenses for individuals with chronic health
Mrs. Clinton also is recycling ideas to allow Americans to import
cheaper drugs from abroad, allow Medicare to “negotiate” prescription
drug prices, and reduce the patent life for innovative drugs — stale
old ideas that are fraught with problems.
Her government-centric solutions would impede creation of new
treatments and cures and, by distorting markets and treatment
decisions, ultimately would drive up health costs.
The plan she announced would require drug developers to provide
“refunds” if they don’t invest in research following Washington’s
Pharmaceutical firms already invest five times more in R&D, relative
to their sales, than the average U.S. manufacturing firm. Forcing
them to jump through Washington’s regulatory hoops will divert this
money from research into new drugs to complying with bureaucratic red
The Clinton proposal would result in fewer new treatments for
patients, restrict access to existing medicines, and result in lost
jobs in one of the highest-paying, most dynamic industries in the
Recent opinion polls have shown that Americans are increasingly
concerned about the cost of prescription drugs. But a new Morning
Consult poll shows that a majority of voters oppose allowing the
federal government to set the price of prescription drugs (51% to
By more than two to one, voters said they believe the private sector
does a better job in negotiating prices than the government (48% to
24%). The Congressional Budget Office agrees that allowing the federal
government to negotiate prescription drug prices will lead to little
if any savings.
Given its massive buying power, the government wouldn’t “negotiate”
prices — it would dictate them. The government’s basic strategy is:
Take it or leave it.
If pharmaceutical firms were to refuse the government’s offer to buy
their drugs at arbitrarily low prices, the drugs could be dropped from
the approved list and would not be available to seniors, resulting in
less access to the drugs seniors need.
A better solution to lowering drug costs is to streamline the
extremely expensive, lengthy, and cumbersome drug approval process so
new treatments can get to market faster and spur greater price
competition. When drug makers compete to sell similar treatments,
And when Mrs. Clinton says she will get pharmaceutical prices down, we
need to look at the Democrats’ track record. President Obama said
that the average American family would save $2,500 a year on health
insurance premiums by the end of his first term. Instead, families
have seen their premiums soar.
Lawmakers cannot bring down drug prices through government fiat.
Competition is the only force that works without decimating the
industry and its research capabilities.
Grace-Marie Turner is president of the Galen Institute.© Copyright 2016 Tanna K, All rights Reserved. Written For: Tinytown Unleashed