Fall 2020 Topic
"Resolved：Countries should not impose price controls on the pharmaceutical industry."
Drug prices and affordability has always been an active topic of debate on both ends of the political spectrum in all major economies. A common albeit blunt instrument to ensure low prices for essential drugs worldwide has been price controls. Investopedia defines price controls as, “government-mandated legal minimum or maximum prices set for specified goods, usually implemented as a means of direct economic intervention to manage the affordability of certain goods. Governments most commonly implement price controls on staples, essential items such as food or energy products”. Even in the United States which holds over 45 percent of the global pharmaceutical market, the call for price controls has made a creeping comeback with a 2016 campaign promise by the President Donald Trump to “lower the prices of prescription medicine”.
Most countries in the world, with the United States being the only major exception, maintain some price controls on prescription drugs.
Proponents of such price controls argue that drug prices are artificially inflated by the tyranny of patents and a complicated and intertwined web of influence pharmaceutical companies exert on governments. Price controls then become an effective tool of ensuring drug affordability, increasing the state’s bargaining power in producing drugs and control price gouging etc. Proponents of price controls also argue that prescription drugs are ‘public utilities’ like electricity and clean water and should be regulated as such.
Opponents argue that price controls stifle innovation and investment in drug R&D due to decreased profits of pharma companies, create drug monopolies as firms capable of surviving with a price floor will only increase their entrenched control of the market and reduce political will to ensure drug affordability through other less interventionist means like compulsory licensing.
This topic is an amazing intersection of economic theory, debates on the role of government, the sufficiency of the free market in regulating pharmaceutical industries’ prices, and the view of healthcare as a basic right. With these arguments in mind, should countries impose or not impose price controls on pharmaceutical companies?
The NHSDLC is excited to announce the following resolution for the Fall 2020 Season: Resolved: Countries should not impose price controls on the pharmaceutical industry.
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