Do price controls affect which drugs patients have access to and how soon?
They absolutely do. Just look at the situation in Europe. For years, drug companies have been choosing to withhold certain medicines from European markets rather than accept the price constraints imposed by governments there.
As a result, many of the latest drugs take longer to reach patients in these places, if they get to them at all. Of the medicines launched between 2012 and 2021, only 61% were available in Germany, only 59% in the U.K., and only 52% in France.
Here in the United States, patients had access to 85% of these drugs.
In Canada, where I was born, just 45% of drugs launched between 2012 and 2021 were available as of October 2022. The country’s public insurance plan reimbursed for just 21% of those drugs. The Canadian Pharmacists Association says that more than 2,000 drug shortages are reported each year north of the border.
Unfortunately, the Trump administration is looking to import the very price controls that have led to these very real discrepancies in access. Its demand for “Most Favored Nation” pricing, whereby drug companies sell to Americans at the lowest price they offer residents of other developed countries, amounts to adopting foreign countries’ price controls.
The president has already claimed that his calls for Most Favored Nation pricing have resulted in drug prices falling “500, 600, and 700 percent and more.” That’s mathematically impossible, of course. But if the administration successfully implements the MFN pricing that Trump has in mind, then Americans will find that they have to wait for access to novel drugs just like their peers in other countries — if they can get access to them at all.
By chilling innovation, these policies also deny patients the benefits of yet-to-be-invented cures and therapies.
The Inflation Reduction Act’s price controls could cut R&D spending to such a degree that 135 fewer new medicines reach the market by 2039, according to Tomas Philipson, a University of Chicago economist. Professor Philipson wrote the foreword to my book The World’s Medicine Chest.
Separate research from Philipson has found that drug companies have halted 55 research programs and abandoned 26 medicines since the passage of the IRA. Funding for research into small-molecule drugs — that is, chemically synthesized pills — declined 70% between September 2021, when the IRA was introduced, and August 2024. Last year, the number of monthly starts for new small-molecule cancer programs declined 43%, relative to the pre-IRA average.
Sally C. Pipes is the president, CEO, and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute.
