Like all price controls, the MFP creates adverse consequences that impose net costs on society.
In a bill chock full of bad policies, the drug pricing provision of the Inflation Reduction Act stands out as particularly troubling. This provision establishes a negotiation process to set a Maximum Fair Price (MFP) on selected drugs for Medicare patients.
Because the legislation calls the MFP a negotiation doesn’t make it so. By statute, the government has the authority to impose draconian penalties on companies that do not comply with the process, including an excise tax up to 95 percent of the drug’s entire U.S. sales. With such a huge stick, the negotiations are in name only. In reality, the government is not negotiating but imposing drug price controls on Medicare patients.
Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.
The Inflationary Effect of Drug Price Controls
Wayne H Winegarden
Like all price controls, the MFP creates adverse consequences that impose net costs on society.
In a bill chock full of bad policies, the drug pricing provision of the Inflation Reduction Act stands out as particularly troubling. This provision establishes a negotiation process to set a Maximum Fair Price (MFP) on selected drugs for Medicare patients.
Because the legislation calls the MFP a negotiation doesn’t make it so. By statute, the government has the authority to impose draconian penalties on companies that do not comply with the process, including an excise tax up to 95 percent of the drug’s entire U.S. sales. With such a huge stick, the negotiations are in name only. In reality, the government is not negotiating but imposing drug price controls on Medicare patients.
Read the op-ed here.
Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.