In today’s LATimes.com, James P. Pinkerton has a commentary titled “Reining In Prescription Prices Is a Seductive Idea. But It Might Kill You.” [registration required]
From his comments:
Why not have price controls on pharmaceuticals? That’s a tempting idea for the federal government, which is desperate to restrain its spending and the size of its deficit. But a closer look ? and a look back at history ? shows that price controls are the falsest of false economies. […]
The Kennedy-Pelosi effort has gained momentum. Sen. John Kerry, the apparent Democratic presidential nominee, has added his oomph, promising that he will do everything to make sure “the American people have affordable medicine available to them.”
That all sounds innocent, doesn’t it? What’s wrong with negotiation? And surely there’s nothing wrong with affordable medicine.
The problem is that it won’t be a real negotiation. The federal government is so big and so powerful, as former head of the Medicare program Gail Wilensky said, that “government doesn’t negotiate prices; it sets them.” And so medicines will be affordable ? for as long as they are available. But as in some present-day addendum to Ayn Rand’s classic novel “Atlas Shrugged,” price controls could cause capitalists and their capital to go on strike; they could pursue more profitable ventures elsewhere in the free market, leaving the rest of us alone with our illness.
See the full article for further analysis.