NCPA - National Center for Policy Analysis

States Eyeing Price Controls On Drugs

April 14, 2000

It's an election year and state politicians are focusing on doing something for older voters: imposing price controls on prescription medications.

At least 16 states are studying ways or considering bills to regulate drug prices.

  • New Jersey and New York have bills in committee that would require companies to sell drugs at the best price offered anywhere in the country -- with the New York legislation also stipulating that the price must be the best offered in foreign countries.
  • Connecticut and Illinois would tie drug prices to the Federal Supply Schedule price.
  • Arizona would set up a board to set maximum prices for drugs.
  • Massachusetts is studying a plan to allow the state to negotiate all drug prices with manufacturers and demand discounts.

The Federal Supply Schedule requires that companies sell drugs to a few government entities, primarily the Veterans Administration, at the best wholesale price offered to any large customers, plus an additional 24 percent discount.

While the pharmaceuticals industry favors expanded prescription drug coverage for the elderly and uninsured, it argues that price controls would ration health care, restrict access to drugs and stifle innovation of new medicines.

Source: Dennis Cauchon, "State Legislators Take the Lead on Drug Prices," USA Today, April 14, 2000.


Browse more articles on Health Issues