In state legislatures across the country, lawmakers are advancing misguided proposals that would impose arbitrary, foreign-government price controls on prescription drugs in the United States. Branded as “foreign reference pricing,” the policy is little more than a repackaged scheme for government price setting. Tying drug prices to arbitrary benchmarks dictated by overseas bureaucracies would undermine patient access to care, stifle medical innovation, and import healthcare policies that run directly counter to core American values of choice, competition, and innovation.
There is a broad consensus that price controls are a disaster because they ignore basic economic reality: when government sets prices below what the market supports, supply shrinks and access suffers. Arbitrary caps discourage production, reduce competition, and lead to shortages, lower quality, or rationing as providers are forced to operate under unsustainable margins. Rather than lowering costs in a meaningful way, price controls often push expenses elsewhere in the system, distort incentives, and leave consumers with fewer choices. History shows that lasting affordability comes from competition and innovation, not from bureaucrats deciding what something should cost.
These same principles apply to prescription drugs. When government price caps prevent pharmacies or physicians from acquiring medicines at sustainable prices, those drugs do not become cheaper; they just become unavailable altogether.
These concerns are not theoretical. During President Trump’s first term, the Centers for Medicare and Medicaid Services acknowledged that this policy would force patients to travel farther for care, accept less effective or riskier treatments, or delay or forgo treatment altogether. Policies that promise lower costs but instead reduce access and worsen care fail patients and should be rejected.
Experience abroad reinforces these concerns. Countries that rely on price controls consistently provide patients with far less access to new medicines than the United States. In developed nations such as the United Kingdom, Australia, and Canada, reimbursement rates for new medicines are less than half those in the United States. These access restrictions carry real and serious consequences. Research shows that if American lung cancer patients had been subject to the same limitations seen abroad, survival gains over a ten-year period would have been reduced by half.
Beyond the direct harm to patients, foreign price controls pose a serious threat to America’s leadership in medical innovation. The United States leads the world in developing new prescription drugs because it rewards risk, investment, and breakthrough research. Bringing a single new medicine to market routinely costs between $1 billion and $2 billion and can take more than a decade of research, testing, and regulatory review.
Foreign reference pricing undercuts that innovation model by signaling that future treatments will be subject not to market demand or patient benefit, but to arbitrary caps imported from foreign governments. It is estimated that such price controls would result in hundreds of fewer new drug approvals over time and the loss of millions of life-years as potential treatments are never developed. Layering additional state-level price setting on top of an already heavily regulated system would only raise development costs, increase uncertainty, and slow the arrival of new, life-saving medicines for patients who depend on them.
The reason foreign reference pricing suppresses innovation is simple: the prices set abroad are the product of government-dominated health systems that prioritize cost containment over patient access and medical advancement. Tying our pharmaceutical prices to their arbitrary baselines does not merely import numbers; it imports the rationing frameworks behind them. Many of the metrics these countries rely on, such as the quality-adjusted life-year formula, have faced heavy scrutiny for devaluing the lives of the elderly and people with disabilities in the name of cost control, an approach that should have no place in American health care.
With healthcare challenges rightly commanding lawmakers’ attention, they should resist the temptation to embrace foreign price controls as a solution. Tying prescription drug prices to those set by foreign governments would import rationing, reduce patient access, and weaken the innovation that has made the United States a global leader in medical breakthroughs. Real reform means addressing the structural failures that drive costs higher while preserving competition, choice, and incentives to innovate. Lawmakers should focus on solutions that expand access and affordability, not policies that falsely promise savings but deliver fewer treatments and worse outcomes for patients.
