The coronavirus pandemic has now become an urgent threat to America. To combat this virus, we are in serious need of treatments and vaccines. This is achieved through innovation, and the U.S. has long been the world leader in medical research and innovation.
But developing a new drug doesn’t come cheap. In fact, the average cost is about $2.6 billion according to a survey by the Tufts Center for the Study of Drug Development. Importantly, the survey also found that drug companies price their products based on the cost and receive a reliable return on their investment after the drug is brought to market.
For a while now, some on the Left have urged the federal government to step in and dictate the price of prescription drugs, effectively preventing companies from charging what a drug is worth in an effort to keep the cost for consumers low.
Proponents of price controls are now using the coronavirus crisis to push their legislative agenda. A new blog by the Coalition Against Socialized Medicine reports:
Amidst the ongoing coronavirus pandemic, the price control comrades are doing their best to profit during this unprecedented pandemic. After attempting to include a provision that would have allowed the government to dictate the price of any COVID-19 vaccine developed using federal funds, it was stripped from the final version.
The author goes on to say that price controls have “proven to deliver devastating impacts on patients and innovation.” While price controls might make prescription drugs more affordable for patients in the short-term, there would be far-reaching, long-lasting effects. As IWF Policy Director Hadley Heath Manning explains in an IWF policy focus examining why pharmaceutical drugs are so expensive, price controls would stifle innovation and even harm patients waiting for new drugs to be developed:
Many foreign countries have attempted to combat high drug costs with price controls (policies that limit how much consumers can pay for certain drugs). While this policy seems to benefit consumers, sadly, it creates its own problems. Countries with price controls on drugs often experience drug shortages, a disservice to the very patients that these policies intended to help. Price controls also threaten to bring new innovations to a halt.
Now is not the time to undermine the innovative work that’s already underway. For example, Johnson & Johnson recently announced a plan to begin clinical trials of its COVID-19 vaccine by September in the hope of having the vaccine ready by early 2021, a process that usually takes years. Many other firms are also working on finding cures or vaccines.
Setting price controls will not help those affected by the coronavirus pandemic. Instead, policymakers should look for ways to both foster innovation and combat high costs which can only be achieved through a free and competitive market.