Price Controls Harm Innovation and Interfere with Competitive Markets

Some members of the Oregon legislature continue to propose unwieldy requirements and burdensome rebates on manufacturers of pharmaceuticals in an effort to cap drug prices. These efforts will not “control” the price of drugs for consumers but will instead create scenarios that will likely limit choice, restrict supply and increase costs. Moreover, price controls discourage innovation and act as a disincentive for robust research and development (R&D) efforts.

While rising health care costs are a significant concern for Americans, there are very few examples in history where price controls have worked for a full segment of the population. Artificially setting prices does not take into account all of the costs and factors that go into creating a new product, such as numerous failed clinical trials or drugs whose revenue fail to cover development costs. Price controls distort incentives in the market and result in product shortages, which could ultimately increase future health care costs.

Lawmakers must consider carefully the negative impacts of imposing price controls and diminishing any intellectual property protections. Attempts to jeopardize all of the investment and years of work associated with the creation of new medicines and products will discourage R&D and innovation—all at the expense of manufacturers’ competitiveness and the future well-being of patients. As the legislative session winds down in Salem, we urge elected officials to be mindful of these adverse impacts.

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