July 2002: Report by Health and Human Services Department Discourages Price Caps on Prescription Drugs

The Office of Policy at the US Department of Health and Human Services (DHHS) releases a report concluding that the US government should not impose price caps on prescription drugs. According to the report, doing so “could put the future of medical innovation at risk and may retard advances in treatment.” [US Department of Health and Human Services, 7/2002, pp. 2 ] The deputy assistant secretary of the division, Ann-Marie Lynch, had used the same argument when she was a drug industry lobbyist (see June 2001) fighting against congressional efforts to cap drug prices. [Denver Post, 5/23/2004] Critics of the report say its conclusions are contradicted by the experiences of other countries that have remained innovative despite price controls. DHHS officials “haven’t taken as seriously their job of making medicines affordable to all Americans,” says Gail Shearer, director of health policy analysis for Consumers Union. According to critics, the report plays a role in the passing of Bush’s Medicare drug plan that prohibits the government from using its buying power to negotiate lower prices from the drug companies.