New Report: Spending Caps Are the Wrong Way to Tackle High Drug Prices

Study finds nearly half of the drug savings would go to households living at or above 400 percent of the federal poverty level.

NEW YORK, NY  – America is suffering from prescription drug sticker shock: Price hikes, like the 5,000 percent price increase on Martin Shkreli’s Daraprim, left candidates and patients alike calling for drug price controls. Candidates such as Hillary Clinton have advocated caps on out-of-pocket spending on prescription drugs, and several states have implemented them already.

A new report by the Manhattan Institute’s Yevgeniy Feyman finds that such caps, while politically appealing, ignore market realities and would benefit only a select few patients while risking higher premiums for everyone else. Nearly half of the drug savings would go to households living at or above 400 percent of the federal poverty level ($97,000 for a family of four).

To benefit more Americans, especially those who need the most help with drug prices, Feyman proposes a set of reforms that would let patients benefit from the price rebates insurers receive, offer tax credits to patients most burdened by high drug prices, and encourage credit markets for prescription drugs.

Click here to read the full report.