The Colorado Legislature recently introduced a bill that would create a prescription drug affordability review board. This review board, the epitome of central planning, would have total control over the prescription drug market in the Centennial State. The board would be able to fine drug manufacturers that don’t comply with their pricing policies up to $500,000.
The problem with this short-sighted idea is that there is no concern for the implications it would have on medical development and drug innovation. The National Bureau of Economic Research found that cutting drug prices by 40 to 50 percent in the United States would lead to a huge decline (30 to 60 percent) in prescription drug research and development projects.
Furthermore, it is lunacy to think that a board of bureaucrats would even be able to accurately determine drug prices. Only the free market can do that. As well-intentioned as this policy may be in attempting to lower drug prices, this is not the solution and will only hurt those that this legislation is intended to help.
As Milton Friedman said, “One of the great mistakes is to judge policies and programs by their intentions rather than their results.”
Rare disease activist Amber Freed, whose son Maxwell has a rare neurological genetic disorder, has spoken out against the legislation and the implications it could have on her son’s future health care: “I am riddled with anxiety thinking about proposed legislation by state lawmakers that would impose arbitrary government price controls on prescription drugs — controls that threaten access, research and ultimately Maxwell’s life. The unintended consequences of Senate Bill 17 for patients across our state clearly show why this bill must be defeated.”
There is no question that competition, not price controls, works best in the medical marketplace. Yet power-hungry politicians all too often believe more central planning is the solution. Unfortunately, centralized planning (like that being considered in Colorado’s prescription drug market) inevitably leads to more cronyism and less liberty. Big government inserting itself in the drug development and pricing process will stifle innovation and reduce the potential outcomes for future miracle cures. Drug manufacturers in the United States are already operating under the heavy hand of the Food and Drug Administration. With that being said, adding state-level bureaucracy to determine pricing might be the nail in the coffin for future drug development.
The goal should be to make safe and effective drugs more affordable and accessible. This legislation would achieve the opposite. The Colorado Legislature should reject any efforts to fix drug pricing.
The unintended consequences of this bill would be detrimental to future drug development and it would be another huge hurdle for small biopharmaceutical startups to overcome. Cures of the future for patients like Maxwell should not be beholden to the whims of government. We the people reserve the power of making decisions for ourselves and our families, especially when it comes to health care. If the past year has taught us anything about government overreach, it has taught us how detrimental government intervention can be, even when political leaders have the best intentions in mind.
[Originally posted on RedState]