Price controls would hamper competition by slowing new drug development

Pelosi’s Expensive Drug Bill: Let’s hope impeachment kills the chance for pharma price controls. WSJ editorial. Excerpts:

"But foreign price controls have reduced access to breakthrough treatments. According to the Galen Institute, 89% of new medicines introduced between 2011 and 2018 are available in the U.S. compared to 62% in Germany, 60% in the U.K., 50% in Japan and 48% in France.

Price controls are also a prescription for less innovation since they reduce the payoff on risky research and development. Over the past 16 years, more than 120 drug treatments for Alzheimer’s disease have failed. Only about 12% of molecules that enter clinical testing ultimately obtain FDA approval, and those successes have to pay for the 88% that fail.

Under Mrs. Pelosi’s bill, companies would also have to offer drugs to private insurers at Medicare’s negotiated rates. All of the 8,000 or so drugs in Medicare Part B and D would also face an inflation-adjusted price cap that applies retroactively to 2016, which is intended to make it especially punitive. A Senate Finance Committee bill backed by some Republicans includes an inflation cap that is supposed to prevent price gouging. But drug makers might respond by launching treatments at higher prices."

"Drug makers get a bad rap because they sometimes raise prices for no apparent reason, and consumers are facing sticker shock because of rising deductibles and co-payments. But net prices after rebates paid to insurers and the government have been falling amid faster generic-drug approvals and more competition from branded drugs.

Price controls would hamper competition by slowing new drug development. The U.S. accounts for most of the world’s pharmaceutical research and development, so there would be fewer breakthrough therapies for rare pediatric genetic disorders, cancers or hearing loss."