Price Controls in Washington, DC

If you live in Washington, DC and take any prescription drugs, you better stock up now. They will soon be unavailable.

The DC City Council just unanimously passed legislation allowing consumers and the DC government to sue pharmaceutical companies that charge "excessive" prices for their products. The legislation puts the burden of proof on pharmaceutical companies to show their prices are not excessive, but helpfully defines excessive as at least being 30 percent over the comparative price in Germany, Canada, Australia or the United Kingdom. (No word on what "comparative" price means.)

The author of the bill, formerly-cool-now-a-complete-asshole-on-many-issues Council member David A. Catania (I-At Large), has this to say:

"This is not price control, this is not price fixing," he said. It would simply require the industry to show that its prices are justified to recoup research and other costs, he said.

First of all, companies don't invest billions of dollars into research that may or may not produce something just to recover their costs. They do it to make money. And that money goes back into the company for further research into life-saving drugs, minus a little money for the stockholders who are rewarded for investing their money in pharmaceutical research instead of buying a new yacht.

Secondly, no company in its right mind is going to sell pharmaceuticals in DC if they could face crippling lawsuits, especially if they can sell their products somewhere else for a higher profit (like Virginia and Maryland). The smart thing for them to do is to stop selling their medicine in the city. And that's exactly what they will do. Just like banks stopped letting people use their ATMS when the insanely stupid people of San Francisco banned ATMS fees.

This may be the stupidest piece of legislation ever passed. I'm going to the pharmacy tomorrow and stocking up on drugs before the shelves are bare.

A good analysis of the stupidity of price controls here. And here. And here.

Policymakers should be required to read Thomas Sowell's Basic Economics before they're allowed to govern. Or better yet, it should be a crime to govern.