Forbes March 10, 2024
President Biden’s State of the Union Address summarized his administration’s two-prong strategy to control prescription drug prices: capping out-of-pocket spending for patients and setting prices for expensive drugs. Imposed with state’s power, such direct measures will certainly limit patients’ out-of-pocket spending and reduce those drugs’ list prices. But will patients actually benefit?
Low Out-Of-Pocket Caps Discourage Manufacturers From Lowering Prices Or Offering Cheaper Options
In healthcare and other markets, sellers voluntarily cut prices or offer cheaper options for one reason alone: to make buyers happy and gain their business. When out-of-pocket spending is capped low, buyers are indifferent to prices and utilization, and sellers have no reason to cut prices or offer cheaper options.
For example, Congress banned out-of-pocket cost...
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