People overwhelmingly want lower drug prices—and reasonably so. However, how states and federal leaders go about this undertaking will make all the difference today and into the future. Legislation being considered in Nevada right now, SB 378, is an example of good intentions turning into bad legislation. The bill ignores the basic principles of free enterprise and sets a dangerous precedent that is likely to be challenged in court if enacted. The District of Columbia attempted a rate-setting law over a decade ago and the Federal Circuit affirmed a District Court ruling that declared the law a violation of the Commerce Clause. Further, the Court also affirmed the federal patent framework preempts such legislative actions.
And if Nevada’s elected leaders do follow through on SB 378, price controls would be the wrong decision—even worse would be the proposed special committee of appointed officials with the power to set drug prices. The drug pricing board that this legislation would create would be empowered to set prices for health plans sponsored by state and local governments, state colleges and universities, and the state Medicaid program. Unbelievably, the board would be funded by gifts or voluntary donations. If it sounds like an invitation to corruption, that’s because it is. What is to stop the board and one of the entities it is supposed to regulate—one of the entities that could be funding it under this proposal—from colluding to fix the price of certain medicines? The potential conflicts of interest are limitless.
Moreover, fixing prices is not an effective means to ensure affordable access to medicines for people who need them the most. Nevada should heed lessons of past price control efforts. But moreover, giving power to an unaccountable, unfunded and unelected board is a recipe for unfair play, corruption and actions that are completely contrary to the principles of free enterprise. Just say no to SB 378.