The Deadly Side Effects of Drug Price Controls

The Biden administration has issued guidance on how it will implement the Medicare drug price controls in the Inflation Reduction Act. The controls will be far-reaching and much worse for the health of the country than critics had anticipated.

The rationale for the price controls is to save taxpayers and seniors money. But the savings on existing drugs are minuscule in comparison to the loss in health resulting from a decrease in drug innovation, which is already taking place. The Congressional Budget Office finds the Inflation Reduction Act will cut drug spending by $238 billion by 2031. Meanwhile, a University of Chicago analysis (of which I am a co-author) predicts the cuts in innovation in new drugs will lead to health losses valued at $18 trillion during the same period.