For Price Controls

Makes pharmaceutical drugs more affordable

• According to Global Health Justice Partnership of the Yale Law School
  and the Yale School of Public Health, patients themselves are bearing the burden of unfair drug prices. Insurers, responding to the increasing number and prevalence of high-cost drugs, have resorted to increasing premiums, deductibles, and out-of-pocket drug payments not covered by insurance plans.
• In a Yale 2017 poll, about one in three Americans reported having trouble affording their cost-sharing and premium requirements. 
• A Commonwealth fund 2016 survey found 14 percent of insured Americans and a third of uninsured Americans failed to take prescribed medicines because the cost was too high.

Decreases federal spending

• According to the American Hospital Association, 19 percent of all Medicare spending is for drugs, and state Medicaid directors identify the high cost of pharmaceuticals, including specialty drugs, as putting growing pressure on their budgets.

According to the Center for Economic Policy and Research, the cumulative savings of these negations to the federal government over the next decade, in a low saving case, would be $229.7 billion. In addition, the savings to state governments would be $30.8 billion, while beneficiaries would save $47.7 billion in lower premiums. In the high saving case, the savings to the federal government over the next decade would be $541.3 billion. The saving to the states would be $72.7 billion, and beneficiaries would save $112.4 billion.

Against Price Controls

Decreases Production of Pharmaceutical Drugs

• Low prices induce drug makers to exit various markets, or at least to reallocate their manufacturing capacity toward more profitable, patented pharmaceuticals. Low prices also tend to eliminate the rationale for investments in better manufacturing technologies and processes, as shown in a 2009 study published in the Journal of Management Science.

Reduces quality of drugs

• According to the National Bureau of Economic Research, declines in the number and innovativeness of new drugs, in turn, lead to decreased longevity and higher expenditures on other forms of medical care. Price regulation also delays drug launches, distorts consumers’ choices toward less innovative drugs, and in some cases actually leads to increases in prices. 
• Forum for Health Economics & Policy stated that the savings of federal price controls for the consumer is outweighed by the loss in life expectancy. After accounting for innovation spillovers, price control reduces the number of new drug introductions by as much as 25 percent relative to the status quo. As a result, life expectancy for the cohort born in 1991–1995 could be reduced by almost two years relative to the status quo. 

Reduces Research and development

• Jim Greenwood explains for the New York Times in 2015 that the reason that the cost for American pharmaceuticals is so high is because companies need the security to justify research and development of new, groundbreaking drugs. If one lower companies profit margins, it becomes harder for them to justify the risk of research and development, and thus the overall impact on the patient is negative as fewer drugs helpful to patients are developed

Decreases production of generic drugs

• National Vaccine Advisory Committee identified price controls as the primary reason for the dramatic decline in the number of suppliers. 

According to the Association for Accessible Medicines, 90 percent of medicinal drug use are generic drugs.