Tomas J. Philipson: Price controls on medicines are stymieing innovation. Trump’s plan will make it worse.
Lawmakers in both parties are increasingly embracing the idea of price controls on medicines — and in doing so, they’re making a losing bet. Price controls involve a fundamental tradeoff: lower prices today in exchange for less innovation tomorrow. Consider the “most favored nation,” or MFN, drug pricing proposal currently before Congress. It would cap U.S. drug prices at the lower rates paid in other countries — dramatically undermining the incentives that drive high-risk research…
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