Resisting price controls on prescription drugs

Originally published in the Washington Times, 5/17/2019

President Trump has made great strides in dismantling the big-government legacy of his predecessor, Barack Obama. Historic tax cuts, dozens of regulations cut for every new one implemented, and two conservative Supreme Court justices, to name a few.

President Trump’s free-market reforms have proven wildly successful. The economy is growing, and consumer confidence is at historically high levels. This progress makes it even more disappointing to see the White House considering price controls on prescription drugs.

The White House is considering a proposal created by the Department of Health and Human Services to control U.S. prescription drug prices called the International Pricing Index (IPI). This system would determine how much to pay for drugs under Medicare Part B — including vaccines and cancer medications — based on their costs in other countries, including those with socialized health care systems. At the same time, Republican Sens. Scott Hawley and Rick Scott have introduced similarly ill-conceived legislation in Congress.

If it sounds too good to be true, that’s because it is. It would be incorrect to assume other countries have lower prescription drug costs because the markets naturally decided so. The International Pricing Index would be aggregating the drug prices of nations that have already artificially lowered drug prices.

You can’t get something for nothing. The government cannot mandate lower drug prices and expect no consequences in the market. In fact, we have already seen the dangers of price controls in other sectors of the economy, from wages to housing. They interfere with supply and demand, causing waste and shortages.