We are deeply concerned about proposed legislation to remove pharmaceutical companies’ ability to control the importation of their products. The goal of this legislation will be to reduce prices in the American market by imposing other nations’ price controls on us. If this attempt succeeds, American consumers would get the short-term windfall of lower prices, but they would end up unnecessarily suffering and living shorter lives–because promising new therapies would be delayed or not even developed. Even the threat of price controls reduces the incentive to develop new drugs.
The ideal solution would be for other wealthy nations to remove their price controls over pharmaceuticals. America is the last major market without these controls. Imposing price controls here would have a major impact on drug development worldwide, harming not only Americans but people all over the world. On the other hand, removing foreign price controls would bolster research incentives. In addition, most new drugs are developed by American firms, and price controls would harm those firms and their employees.
Drug price controls are more difficult to remove than other price controls. Controls on oil and other products often tend to be limited or short-lived, as voters eventually object to the resulting shortages and distortions. The effects of drug price controls, however, are far more difficult to observe because they mainly affect medicines that haven’t been invented yet.
Even if people were to realize that price controls are preventing new drugs from being developed, undoing the effects of those controls would be a difficult task. Customers would have to pay higher prices for years before they saw benefits. Firms would have to be convinced that controls would not be reimposed as soon as their new drugs are released.
For these reasons, we urge Congress to abandon attempts to peg U.S. drug prices to controlled prices in other nations.
Burton Abrams, Professor of Economics, University of Delaware
William P. Albrecht, Professor of Economics, University of Iowa
Donald L. Alexander, Professor of Economics, Western Michigan
University
Joseph Antos, Wilson H. Taylor Scholar in Health Care and Retirement Policy, American Enterprise Institute
Paul Ballantyne, Professor of Economics, University of Colorado at Colorado Springs
Doug Bandow, James Madison Scholar, American Legislative Exchange Council
Claude E. Barfield, Director of Science/Technology Policy Studies, American Enterprise Institute
Stacie Beck, Professor of Economics, University of Delaware
Don Bellante, Professor of Economics, University of South Florida
Bruce Bender, Professor, School of Business Administration, University of Wisconsin-Milwaukee
Daniel K. Benjamin, Professor of Economics, Clemson University
John Berthoud, George Washington University
Elizabeth C. Bogan, Professor of Economics, Princeton University
Patrick Bolton, Professor of Economics, Princeton University
David Bradford, Professor of Economics, Woodrow Wilson School, Princeton University.
David P. Brown, Chairman, Department of Finance, University of Wisconsin – Madison
Mary Bumgarner, Professor of Economics, Kennesaw State University
Henry Butler, Professor, The George L. Argyros School of Business and Economics, Chapman University
John E. Calfee, Resident Scholar, American Enterprise Institute
Kenneth W. Chilton, Associate Professor of Management, Lindenwood University
James E. Clark, Professor of Economics, Wichita State University
Kenneth W. Clarkson, Professor, Law and Economics Center, University of Miami
Darin G. Clay, Professor of Economics, Department of Finance and Business Economics, University of Southern California
R. Morris Coats, Professor of Economics, Nicholls State University
Lloyd Cohen, Professor, George Mason University School of Law
Eleanor D. Craig, Professor of Economics, University of Delaware
W. Mark Crain, Professor, George Mason University
Robert M. Dammon, Professor of Financial Economics, Carnegie Mellon University
Donald R. Davis, Professor of Economics, Columbia University
Steven J. Davis, Professor of Business Economics, Graduate School of Business, University of Chicago
Gregory Delemeester, Professor, Department of Economics, Management and Accounting, Marietta College
Arthur M. Diamond, Jr., Professor of Economics, University of Nebraska at Omaha
Michael J. Donnelly Jr., Principal and Senior Economics, Global Insight Inc.
Jeffrey H. Dorfman, Professor, Department of Agriculture and Applied Economics, University of Georgia
Thomas J. Duesterberg, President and Chief Executive Officer, Manufacturers Alliance/MAPI
Dennis F. Ellis, Professor Emeritus of Business Economics, University of Michigan-Flint
Bert Ely, Ely & Company, Inc.
Kenneth G. Elzinga, Professor of Economics, University of Virginia
Eric M. Engen, Resident Scholar, American Enterprise Institute
Michael R. Englund, Chief Economist, MMS International
Stephen J. Entin, President, Institute for Research on the Economics of Taxation
Richard E. Ericson, Chair, Department of Economics, East Carolina University
Paul Evans, Professor of Economics, Ohio State University
Frank Falero, Emeritus Professor of Economics, California State University
Paul J. Feldstein, Professor, Graduate School of Management, University of California at Irvine
Darren Filson, Professor of Economics, Claremont Graduate University
Micah Frankel, Associate Dean, California State University, Hayward
Milton Friedman, Senior Research Fellow, Hoover Institution, Stanford University
Gary Galles, Professor of Economics, Social Science Division, Pepperdine University
B. Delworth Gardner, Professor Emeritus of Economics, Brigham Young University
Dave Garthoff, Professor, Department of Associate Studies, University of Akron
James F. Gatti, Professor, School of Business Administration, University of Vermont
Joseph A. Giacalone, Professor of Economics, St. John’s University
Stephan F. Gohmann, Professor of Economics, University of Louisville
Henry Grabowski, Professor of Economics, Duke University
William B. Green, Professor, Department of Economics and International Business, Sam Houston State University
Kenneth V. Greene, Professor of Economics, Binghamton University
David Hammes, Chair and Professor of Economics, University of Hawaii at Hilo
John R. Hanson II, Professor of Economics, Texas A&M University
Stephen Happel, Professor of Economics, W.P Carey School of Business, Arizona State University
Scott Harrington, Professor, Moore School of Business, University of South Carolina
Kevin A. Hassett, Director of Economic Policy Studies, American Enterprise Institute
Robert F. Hebert, Professor of Economics, Moody College of Business Administration
Dale Heien, Professor, Department of Agricultural and Resource Economics, University of California-Davis
Robert B. Helms, Director of Health Policy Studies, American Enterprise Institute
James W. Henderson, Professor of Economics, Baylor University
Bradley K. Hobbs, Professor of Economics, Florida Gulf Coast University
Irving Hoch, Professor of Economics and Political Economy, University of Texas at Dallas
George Horwich, Professor Emeritus of Economics, Purdue University
E. Bruce Hutchinson, Professor of Economics, University of Tennessee at Chattanooga
Joseph M. Jadlow, Professor, Department of Economics and Legal Studies in Business, Oklahoma State University
Thomas D. Jeitschko, Professor of Economics, Michigan State University
Douglas H. Joines, Professor of Economics, Department of Finance and Business Economics, Marshall School of Business, University of Southern California
Clifton T. Jones, Professor and Chair, Department of Economics and Finance
Garrett Jones, Professor of Economics and Finance, Southern Illinois University-Edwardsville
Raymond J. Keating, Chief Economist, Small Business Survival Committee
Kristen Keith, Professor of Economics, University of Toledo
Don Kenkel, Professor of Economics, Department of Policy Analysis & Management, Cornell University
Robin Klay, Professor of Economics, Hope College
Audrey D. Kline, Professor of Economics, University of Louisville
Paul Koch, Professor of Economics, Olivet Nazarene University
Eugene M. Kolassa, Managing Partner, Medical Marketing Economics, LLC
Michael I. Krauss, Professor of Law, George Mason University School of Law
Robert Krol, Professor of Economics, California State University, Northridge
William E. Laird, Professor Emeritus of Economics, Florida State University
Russell Lamb, Professor, Department of Agriculture and Resource Economics, North Carolina State University
Richard N. Langlois, Professor of Economics, University of Connecticut
Nicholas A. Lash, Professor of Finance, Loyola University Chicago
Thomas M. Lenard, Vice President for Research, The Progress & Freedom Foundation
Mickey D. Levy, Chief Economist, Bank of America
Stan Liebowitz, Professor of Economics, School of Management, University of Texas at Dallas
Tony Lima, Professor of Economics, California State University
Cotton M. Lindsay, J. Wilson Newman Professor, The John E. Walker Department of Economics, Clemson University
Donald L. Losman, Professor of Economics, Industrial College of the Armed Forces
John R. Lott, Jr., Resident Scholar, American Enterprise Institute
Harold I. Lunde, Professor Emeritus, Bowling Green State University
Kerry Macintosh, Professor, Santa Clara University School of Law
Stephen Margolis, Professor of Economics, North Carolina State University
Joseph P. Magaddino, Professor of Economics, California State University, Long Beach
Michael L. Marlow, Professor of Economics, California Polytechnic State University-San Luis Obispo
Deryl W. Martin, Heidtke Professor of Finance, Tennessee Technological University
Scott E. Masten, Professor of Business Economics and Public Policy, University of Michigan Business School
Merrill Matthews, Institute for Policy Innovation
John McClaughry, President, Ethan Allen Institute
Paul W. McCracken, Edmund Ezra Day Distinguished University Professor Emeritus of Business Administration, Economics and Public Policy, University of Michigan Business School
Tom Means, Professor of Economics, San Jose State University
Roger E. Meiners, Professor of Economics, University of Texas-Arlington
John Merrifield, Professor of Economics, University of Texas at San Antonio
Paul G. Merski, Former Chief Economist, Joint Economic Committee, U.S. Congress
Laurence S. Moss, Professor of Economics, Babson College
Michael C. Munger, Professor and Chair, Department of Political Science, Professor, Department of Economics, Duke University
David J. O’Hara, Professor of Economics, College of Management, Metropolitan State University
James B. O’Neill, Professor of Economics, University of Delaware
June O’Neill, Wollman Professor of Economics, Baruch College, City University of New York
Randall E. Parker, Professor of Economics, East Carolina University
Allen Parkman, Professor of Management, Andersen School of Management, University of New Mexico
E.C. Pasour, Jr., Professor Emeritus, Department of Agriculture and Resource Economics, North Carolina State University
Mark J. Perry, Professor of Finance and Business Economics, University of Michigan-Flint
William H. Peterson, Adjunct Scholar, Heritage Foundation
Keith T. Poole, Professor of Political Science, University of Houston
Jan S. Prybyla, Professor Emeritus of Economics, Pennsylvania State University
Richard W. Rahn, Senior Fellow, Discovery Institute
Ronald A. Ratti, Professor of Economics, University of Missouri-Columbia
Richard Rawlins, Professor, Department of Finance, Economics & International Business, Missouri Southern State University
Bob Reed, Professor, Department of Economics, University of Oklahoma
Jay R. Ritter, Cordell Professor of Finance, University of Florida
Aldona Robbins, Visiting Fellow in Social Security Analysis, Heritage Foundation
Gary Robbins, Visiting Fellow in Tax Analysis, Heritage Foundation
Nancy H. Roberts, Professor of Economics, Arizona State University
David C. Rose, Professor of Economics, University of Missouri-St. Louis
Richard N. Rosett, Dean Emeritus, College of Business, Rochester Institute of Technology
Gabriel Roth, Research Fellow, Independent Institute
Jim Roumasset, Professor of Economics, University of Hawaii
Paul H. Rubin, Samuel Candler Dobbs Professor of Economics and Law, Emory University
Mark Rush, Professor of Economics, University of Florida
Gerard Russo, Professor of Economics, University of Hawaii
Raymond Sauer, Professor of Economics, Clemson University
Thomas R. Saving, Private Enterprise Research Center and Department of Economics, Texas A&M University
Mike Schuyler, Senior Economist, Institute for Research on the Economics of Taxation
John J. Seater, Professor of Economics, North Carolina State University
Larry J. Sechrest, Professor of Economics, Sul Ross State University
Carlos Seiglie, Professor of Economics, Rutgers University
John Semmens, Economist, Laissez Faire Institute
William F. Shughart II, F.A.P. Barnard Distinguished Professor of Economics, University of Mississippi
James F. Smith, Professor of Finance, Kenan-Flagler Business School, University of North Carolina-Chapel Hill
John C. Soper, Professor of Economics, Boler School of Business, John Carroll University
David E. Spencer, Professor of Economics, Brigham Young University
E. Frank Stephenson, Professor of Economics, Berry College
Michael P. Sweeney, Evart McCabe / United Parcel Service Endowed Chair in Economics Business and Accounting, Hillsdale College
Alex Tabarrok, Professor of Economics, George Mason University, Director of Research, The Independent Institute
Richard H. Timberlake, Professor of Economics, retired, University of Georgia
Leo Troy, Professor of Economics, Rutgers University
Grace-Marie Turner, President, Galen Institute
Charles Upton, Professor of Economics, Kent State University
Randal Verbrugge, Bureau of Labor Statistics
Marc Weidenmier, Professor of Economics, Claremont McKenna College
Robert Whaples, Professor of Economics, Wake Forest University
Steven N. Wiggins, Professor of Economics, Texas A&M University
Michael E. Williams, Professor of Economics, Reiman School of Finance, University of Denver
Douglas Wills, Professor, Department of Business Administration, University of Washington Tacoma
Gary Wolfram, George Munson Professor of Political Economy, Hillsdale College
Paul J. Zak, Director, Center for Neuroeconomic Studies, Claremont Graduate University, Adjunct Professor of Neurology, Loma Linda University
Kate Zhou, Professor of Political Science, University of Hawaii
Michael Zimmer, Professor of Economics, University of Evansville
Benjamin Zycher, Senior Fellow, Pacific Research Institute
Dr. Milton Friedman, who received the 1976 Nobel Memorial Prize for economic science, has been a senior research fellow at the Hoover Institution since 1977. He is also the Paul Snowden Russell Distinguished Service Professor Emeritus of Economics at the University of Chicago, where he taught from 1946 to 1976, and was a member of the research staff of the National Bureau of Economic Research from 1937 to 1981. Friedman was awarded the Presidential Medal of Freedom in 1988 and received the National Medal of Science the same year. This open letter was first published on November 20, 2003 by Tech Central Station (http://www.techcentralstation.com) and is reprinted here with permission.
