Momentum is building in many states to establish prescription drug “affordability” boards with the power to impose upper payment limits on drugs that are deemed unreasonably expensive. But as economic theory, as well as historical experience shows, such policies, like other forms of government price controls, produce shortages, economic inefficiencies, and, ironically, threaten patients’ access to low-cost medicines. More specifically, drug “affordability” boards can disrupt the generic drug market, which has generated nearly $2 trillion in savings over the last decade, undermine pharmaceutical competition, and drive consumers to more expensive alternatives. Policymakers seeking to lower drug costs for American consumers should instead prioritize reforming the anti-competitive pharmacy benefit managers and ensuring that health plans are not preferring higher-priced brand drugs over generics and biosimilars.
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