More on the economics of the pharmaceutical industry is available in this report by the National Taxpayers Union. The history of price controls with special attention paid to medical price controls is discussed by The Independent Institute's President David Theroux and health economist Simon Rottenberg. Price controls have always led to shortages, black markets, reduced quality, and more government bureaucracy. The specifics of President Clinton's Medicare Proposal are analyzed in a Heritage Foundation backgrounder by James Frogue and Robert Moffitt. Ironically, price controls not only harm consumers and producers of drugs they rarely lead to cost-savings for governments.
Drugs are one of the least costly methods of improving health.
Drugs to lower cholesterol, for example, save millions of dollars by preventing future heart attacks. A Boston Consulting Group study examining the effect of price controls internationally finds no cost savings to governments. Canada's global health budgets have also not been succesful in reducing costs as indicated in this brief NCPA study . Lower drug prices through lower income is not a policy the United States should desire to imitate. Just because price controls are a bad idea doesn't mean that the efficiency and equity of the health care market cannot be improved.