Regulations aiming to lower the cost of vital medicines will instead end up restricting access and disincentivizing R&D.
In May of this year, President Donald Trump signed an executive order aiming to bring U.S. drug prices in line with those in countries where medicines are cheaper, and followed this with letters to biopharmaceutical CEOs in July outlining requests along the same lines. Meanwhile, to date, 25 drugs have been selected for Medicare price controls as directed by the Inflation Reduction Act.
All are examples of U.S. policymakers’ attempts to lower drug costs by adopting price controls like those employed in some other countries. While it may seem reasonable to align U.S. prices with those in countries like Canada, Germany or the U.K., which have a single-payer model, this overlooks a critical trade-off: those lower prices, determined by local governments, local budgets and local judgments of their value, often come at the cost of delayed or restricted access to innovative treatments. In contrast, the U.S. has allowed market competition to drive down prices while maintaining faster access to new therapies and supporting a robust biopharmaceutical sector.
As policymakers are looking to expand top-down price controls, the private sector is already demonstrating a competitive, healthy and successful market. Prices are coming down through competition, particularly in treatments for diabetes, stroke, hepatitis C and obesity.
GLP-1s: A Case Study
Take GLP-1 medicines for obesity for example. In just the past few years, market competition has brought down prices of these drugs while expanding access to treatment. The discounted prices are a cost-effective investment in public health with a large potential benefit to reducing future costs as well as the incidence of diabetes, cardiovascular disease and other consequences of obesity. Competition in this space has ensured the U.S. can continue to lead and innovate while providing U.S. patients with timely access to medicines.
GLP-1 prices came down as insurers, pharmacy benefit managers and drug manufacturers developed contractual agreements with discounts to put the drugs on formularies and offered direct-to-consumer discounts. By 2022, a year after the drug was approved, the price after discounts for Wegovy was reduced by 41%, or roughly $717 a month. In 2023, with competitor Zepbound on the scene, the price for Wegovy to insurers was estimated at $649—25% off the list price. Since then, discounts have continued to grow, further reducing the net prices.
Lower direct-to-consumer prices are now also available, and completely transparent. Ozempic and Wegovy are each now $499 per month for people without insurance coverage. These prices are well below the consensus of the value-based price methods from drug pricing watchdog ICER and a new study from the USC Schaeffer Center.
The High Cost of Price Controls
Because many people want to use these medicines, even with the discounts they will have a sizable short term impact on healthcare spending, as would any new invention. But focusing on the immediate budgetary impact ignores the costs incurred if people who need these medicines cannot take them.
Those who are considering importing restrictive pricing policies do not seem to appreciate that the way other countries control costs is by restricting access to care. For example, in England a GLP-1 medicine can only be prescribed by weight management specialists, who are in short supply and underfunded. In Germany the GLP-1s for weight loss are excluded from coverage in public insurance, as they are by Medicare and Medicaid in the U.S. And Canada does not recommend that private prescription drug plans cover obesity medicine, while Japan only covers obesity care if the person has two or more weight-related comorbidities. These policies, while saving money in the short term, deny access to care that could prevent disease, improve lives and reduce the longer-term burden of chronic disease on the economy.
Meanwhile, market competition in the U.S. has fueled its world-leading biopharmaceutical research industry, cultivating well-paying jobs and faster access to lifesaving treatment in the U.S. relative to other countries where people wait months or years or never get access to newly approved medicines.
The U.S. is already seeing the effects of price controls. Under the IRA, the government selected 25 drugs to set their prices in Medicare in 2026 and 2027. For the first 10 drugs to undergo this price-setting, there were limited savings because competition had already reduced prices. Government interference in a reasonably well-functioning market rarely improves it.
The U.S. can come up with a better solution than copying Europe and Japan, regions that have seen an exodus of drug manufacturing and clinical trials with their restrictive pricing regimes. Before we rush to adopt foreign price controls, we should ask what we’re really trading away. Lower sticker prices abroad often come with hidden costs: delayed access, limited availability and stifled investment in innovative technology. The U.S. has a chance to lead—not by emulating restrictive systems but by building on what works: competition, price transparency, innovation and access. Let’s not sacrifice the future of American healthcare for short-term savings and imported illusions.
