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Bureaucratic establishments have sunk their tentacles deep into the medical and pharmaceutical sectors, and only a careful, deliberate dissection of these regulatory burdens can revitalize the system.Trump has been busy. A recent action of his slipped under the radar as it’s not as exciting as deportations, DOGE dismantling corruption, and bringing back plastic straws. The president recently reversed key aspects of the Biden administration’s price control policies that were enforced on pharma through the Inflation Reduction Act (IRA). This is a step in the right direction. As the renowned economist Thomas Sowell once said, “The most basic thing that can be said about price controls is that they have been tried and failed in thousands of places and in thousands of times, from ancient Rome to modern America.” No market entity is immune to this principle — not even Big Pharma.
To illustrate the folly of price controls, consider the hammer and peg toy. When you push one peg down, another pops up, in a frustrating and fixed back and forth. This concept effectively demonstrates the reality of price controls. Lowering the cost of one drug often raises the price of another or shifts the burden elsewhere, passing the buck to consumers. These cost shifts are used as justification for further pharmaceutical reforms, inevitably leading to additional price controls and regulations and the cycle continues ad infinitum.
An example of this dynamic manifested in India in 2013 with the implementation of the Drug Price Control Order (DPCO) — no colorful euphemism when naming this bill. The DPCO outlined a list of essential medicines that would be subject to price caps. Pharmaceutical companies curtailed advertising and stopped sending out sales representatives for these price-controlled drugs. Consequently, many physicians — especially those who rely on sales detailing for information — were less inclined to prescribe the regulated medications and instead turned to alternative drugs that were not subject to the price caps, which were more expensive. This shift in prescribing behavior ultimately undermined the policy’s intended benefit of broadening access to affordable medicines and cost the consumers more money.
Price controls in the pharmaceutical sector take many forms. The Inflation Reduction Act (IRA) imposes price controls on up to 60 critical drugs by 2028 (sound familiar?) — covering treatments for diabetes, heart failure, and blood clot prevention — by allowing Medicare the authority to negotiate prices. This is, by every measure, price controls in action. While such actions may offer immediate relief for those in need, they are a clear instance of government interference that distorts market dynamics, stifles innovation, and ultimately undermines the efficiency of free market forces.
Price controls are not only ineffective at reducing overall drug costs but also stifle innovation. By capping drug prices, the incentive for investment in pharmaceutical research and development diminishes. Private investors — Big Pharma being the largest contributor, funding up to 80% of R&D — drive medical advancements. When external entities impose pricing controls, they introduce market uncertainty, making future growth and revenue projections difficult. Quite simply, the heavy hand and deep pockets of the government create an environment of caution, deterring investment. Following the passage of the IRA, clinical trial initiations decreased by 35%. For the industry to develop groundbreaking treatments, it requires both capital and investor confidence. Trump’s move to reverse key aspects of this legislation could reopen the doors to critical clinical trials, fostering renewed progress in drug development.
<img alt captext="RawPixel.com” class=”post-image-right” src=”https://conservativenewsbriefing.com/wp-content/uploads/2025/02/price-controls-the-red-herring-of-pharmaceutical-reform.jpg” width=”450″>Drug pricing can discourage pharmaceutical companies from investing in the costly venture of research and development (R&D) and clinical trials. On average, the development of a single drug costs approximately $2.5 billion, a sum to which must also be added production and supply costs. When pricing is centrally controlled by entities that are removed from the direct process of taking a drug from the bench to the bedside, the resulting price may not reflect the true market value or account for the substantial expenses involved. The development process is complex: drugs must be designed, tested, manufactured, supplied, stored, and administered, with each step requiring specialized personnel whose work must be compensated. The consequences of the misaligned pricing structures created by the IRA are presently evident, with massive layoffs scheduled for this year at major pharmaceutical firms that produce drugs directly impacted by this bill.
Milton Friedman argued that price controls inherently undermine free enterprise. The most alarming reality is that price controls on pharmaceutical drugs are merely another step toward the broader goal of universal healthcare. By influencing factors such as drug costs, investment opportunities, price negotiations, and even fiscal shifts, these opportunities open the door for increased government intervention in our healthcare system. One of the IRA’s primary objectives was to expand the Affordable Care Act at the taxpayers’ expense. This is part of a broader strategy to push reforms underpinned by anti-corporate rhetoric, portraying pharmaceutical companies as greedy and justifying further government control through price regulations. It’s a siren’s call.
Price controls in the pharmaceutical sector carry an undeniable allure. Unlike more traditional markets — such as housing, commodities, or luxury goods — pharma is often seen as operating outside the familiar laws of supply and demand. Moreover, these controls deliver an immediate, tangible benefit to those who rely on these drugs the most, making them especially attractive in a public debate where Big Pharma rarely appears the victim. Nevertheless, government-imposed legislation may alleviate pressures in the short term, but it always carries sinister long-term consequences. The costs may be postponed, but they will inevitably materialize. Ultimately, whether we are discussing groceries, automobiles, or pharmaceuticals, “The Invisible Hand” remains the most reliable mechanism for fostering genuine progress and efficiency.
Trump’s recent move in the right direction on pharmaceutical policy signals a crucial step toward restoring free market principles to an industry long suffocated by government overreach. Yet, price controls are merely one head of the snake. The FDAs massive expansion has not only failed to deliver the promised benefits but has instead acted as a millstone around the neck of market-driven innovation.
It should be mentioned that Trump left some price controls in place, primarily on insulin. The high cost of pharmaceuticals can be a challenging issue. Practices like “evergreening” patents — where companies extend exclusivity rights for minor modifications — deserve scrutiny, as they can stifle competition and keep drug prices artificially high. Reforming the patent system generally to encourage a more competitive market could be a meaningful step forward. Expanding access to generics and biosimilars would also drive down costs. Pricing negotiations between Pharmacy Benefit Managers (PBMs), rebate options, and health insurance practices are all avenues to explore. Pricing should be as transparent as possible. Lastly, there are times when the mere threat of price controls can push companies to take preemptive action — much like Trump’s approach to tariffs. When used strategically, this tactic can encourage market-driven solutions without direct government intervention.
Bureaucratic establishments have sunk their tentacles deep into the medical and pharmaceutical sectors, and only a careful, deliberate dissection of these regulatory burdens can revitalize the system. The momentum is now on the side of conservatives to enact real, lasting reform — reform that shifts power away from government bureaucrats and back to patients and doctors, where medical decisions belong.
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