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 and development (R&D).
Proponents of MFN are implicitly wagering that savings on existing medicines will outweigh the lost benefits of treatments never developed. But in fact, the opposite is true. That’s because modern innovation is increasingly aimed at treating disease earlier and preventing progression altogether — driving compounding human and economic benefits over time.
As drug innovation advances toward earlier intervention and better long-term outcomes, the societal costs of undermining it through price controls will only grow.