Economic theory and empirical evidence show that price controls cause enormous harm. Existing federal price controls have already cost Americans an estimated 140 million life‐years. Applying such controls to Medicare purchasing would eliminate approximately 40 percent of all future pharmaceutical research and development and cost another 277 million life‐years.
Rather than attempt to fix drug prices, Congress should reform Medicare by converting it to a program that provides premium support for the purchase of private insurance policies offering a broad array of options, including prescription drug coverage. Washington also should pressure other nations to lift their price controls, encourage patients to be more careful drug purchasers, and reduce unnecessary regulatory costs by reforming the federal Food and Drug Administration.
In the meantime, Congress should contain the spread of pharmaceutical price controls by delaying or repealing the Medicare drug benefit before it takes effect.