Tuesday, March 11, 2008

Controls on "Excessive Prices" on Drugs has Powerful, Invisible Effects 

Filed As:  Health Care

As state and federal officials push for importation of American medicines from abroad to obtain cheaper drugs, they would do well to look at the experience of our nation's capital, writes Doug Bandow.

The Washington D.C. City Council outlawed "excessive prices" for medicines in 2005, but shortly after its passage, a federal District Court of Appeals voided the law, concluding that it would undermine the federal government's authority to grant patents and allow inventors a fair return on their research. The city tried to appeal the decision, and lost again.

Unfortunately, what makes price controls attractive politically is that the costs are invisible. People won't suffer the worst consequences of price controls for years, given the long lead time in drug development. And it is impossible to say what products won't be available since no one knows what cures otherwise would have been discovered. The trade-off is cheaper drugs for voters today versus unrecognized deaths and hardship for the unborn in the future. If public officials really want to help the sick, they will keep their hands off of drug production.

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