Letter to the Nevada Senate: Price Controls on Lower Cost Drugs is a Bad Idea

Dear Chairwoman Carlton:

As a non-profit research organization representing consumers in Nevada and around the United States, we strongly oppose Nevada Senate Bill 380 (SB 380).

As your Committee seeks much-needed remedies to the rising cost of health care, and specifically prescription drugs, we encourage you to resist efforts that directly or indirectly impose price controls on pharmaceutical manufacturers. Allowing state-level bureaucratic agencies to effectively set prices for medicines will not address the accessibility challenges patients face. Moreover, there is no empirical evidence that these initiatives have any impact on what consumers pay at the pharmacy counter.

Instead, as the American Consumer Institute’s research has demonstrated, so-called “transparency” bills, like SB 380, and other similar efforts could undermine the very solution to costly prescription drugs: competition. That is because SB 380, as written, creates well-intentioned but onerous reporting requirements that will disproportionately harm generic manufacturers, whose products drive down the cost of pharmaceuticals for Nevada families and seniors. Imposing additional costly administrative burdens on generic manufacturers – whose profit margins are already extremely thin – only disincentives these firms bringing more affordable medicines to patients.

Chilling drug competition could have devastating impacts. Data from a 2019 FDA study showed that when six or more generic producers are in the market as competitors for a product, prices are 95% cheaper than the brand name alternative.

Generic prescription drugs are a lifeline for countless Nevadans. In fact, generics saved Nevada- including patients and government programs $2.4 billion in 2019. Driving these affordable medicines out of the market risks leaving patients without a viable cheaper alternative. At least 90 percent of prescriptions filled are for generic alternatives, and yet generic drugs represent less than a quarter of prescription drug spending. According to an April 2020 report by the AARP, the price of commonly used generic drugs are on average 18 times cheaper than their brand-name equivalents. SB 380 should not target lower priced generic drugs.

We thank the Committee for its service and its attention to these important matters. Please do not hesitate to contact us if we can be a resource for you and other Committee members.

Sincerely,

Steve Pociask, President/CEO, American Consumer Institute

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