Top-Down Government Efforts to Corral Drug Prices Will Fail

Americans pay a lot for pharmaceuticals, and politicians of all stripes are offering prescription drug price-relief proposals to force prices downward. Top-down approaches, though, carry a high chance of failure. The astronomical price incorporates the massive up-front costs of testing and gaining FDA approval. The often erratic and unpredictable process can take 15 years and $1.5 billion. Most prospective drugs never make it to market. That’s much of what you’re paying for. Second, despite popular perception, drug manufacturers are only middle-of-the-road among American industries in terms of profitability. Employ blunt price controls, and you’ll likely cut industry profitability, drive investors away, and discourage development of new drugs.