Minnesota - Oppose Price Controls | Council For Citizens Against Government Waste

Minnesota - Oppose Price Controls

February 20, 2019

Minnesota House Commerce Committee
State Capitol
St. Paul, MN 55155

Dear Committee Members,

On behalf of the 35,581 members of the Council for Citizens Against Government Waste (CCAGW) in Minnesota, I ask you to oppose HF 4, which would allow the attorney general to impose a price ceiling on prescription drugs in the state.

Price controls do not work.  They result in shortages, hoarding, and chaos in the marketplace that discourage new participants from entering the market.  Price controls stifle innovation and research that is needed to develop more treatments and cures.  Most significantly, price controls hurt the patients who need these drugs most by creating less competition and fewer new drugs, while raising prices for existing drugs.

This legislation uses phrases like “unconscionable,” which are difficult to define.  It is not the government’s role to decide what price is too high.  Moreover, HF 4 applies to any drug that costs more than $80 for a 30-day supply.  A price of $2.50 per dose would be defined as unconscionably high.  The bill would also impose burdensome requirements on prescription drug manufacturers, forcing them to disclose confidential and sensitive proprietary information that relates to drug pricing.  Such forced disclosures would jeopardize innovation and undermine competitive market forces.  The harmful effects would be especially pronounced in the field of biosimilars and generic drugs.

HF 4 also raises serious constitutional issues.  In 2018, the Fourth Circuit Court of Appeals held that a similar “price gouging” bill in Maryland was unconstitutional because it tried to regulate trade beyond the state’s border.  On February 19, 2019, the Supreme Court refused to review that decision.  Should the Minnesota legislature approve HF 4, it could suffer the same fate.  Such unnecessary court challenges would waste tax dollars.

The price of prescription drugs generates much attention and controversy, and it is understandable that legislators, government officials, and consumers are expressing their concern.  But the best approach to lowering drug prices is an environment that fosters competition, not one that unconstitutionally imposes price controls.

Minnesota legislators should urge their federal counterparts to hold the Food and Drug Administration (FDA) accountable for the backlog of drugs awaiting approval.  This would be a far more effective way to lower drug prices for all patients.  Please oppose HF 4.

Sincerely,

Thomas A. Schatz

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