Price Controls On Drugs: Short-term Advantage Compared With Long-term Disadvantage

This article discusses the disadvantages of placing price caps in drugs, which expands more on the consequences of price controls introduced in chapter 8 of the book. It takes researchers lots of money and efforts to fully research and develop new drugs that if successfully tested and approved by the FDA, will be made available to consumers. In order to compensate for the high cost of research and development, drugs are set at prices that can climb up to thousands of dollars. However, some consumers cannot afford to buy expensive drugs. A conflict exists between making drugs affordable to patients and creating incentives for more drug research in the future. With a price control on medicine, patients can enjoy the benefits of a fair price. However, this good intention can result in an unintentional consequence: less drug research, which could be more harmful.

1 Comment »

  1. hoangl Said,

    December 14, 2015 @ 2:25 am

    This article presents a very practical problem on the price of drugs. Even if the government wants to help the people by laying a price ceiling on drugs, in the longterm, it is going to harm the consumer because the price ceiling decreases producers’s incentive to research and develop new types of drugs.

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