By NextBestFitPrice limits can cause shortages, launch delays, or exits
If a single buyer sets prices too low, manufacturers may not launch products, generic makers may stop producing, and providers may leave or limit services.
Evidence
- Low generic prices contribute to sterile-injectable shortages.
Who's affected
- People with ongoing or specialist care needs: Low price limits may reduce access to products and services through shortages or exits.
- Taxpayers and public budgets: Low price limits reduce spending in the short term.
Under your mix of paths
- Prices below what sustains supply
Open questions
- How should prices be set to sustain supply and innovation?
Caused or worsened by these paths
This problem only matters if one of these paths is chosen.
Uniform rates set too low can cause exits.
Capping commercial payments reduces revenue for hospitals dependent on high commercial prices.
National price negotiation may lead manufacturers to delay drug launches.
Linking domestic price caps to foreign prices may lead manufacturers to raise prices abroad or delay launches there.
Solution paths (3)
Open a path for what it fixes, what it creates or worsens, who gains and who loses, precedents, and how it connects to other paths. See all paths as a decision tree.
Set minimum prices or multi-year contracts for essential generics and services so supply stays profitable.
- +Price limits can cause shortages, launch delays, or exits
- +Drug shortages of cheap, essential generics
- −Raises spending or loosens control over it
- −Depends on uncertain evidence or judgments
Track launches, discontinuations, and provider participation; raise prices automatically when supply falls.
- +Price limits can cause shortages, launch delays, or exits
- −Solves only part of the problem
- −Requires new or changing information systems
Link favorable pricing to launching in the U.S. promptly.
- +Price limits can cause shortages, launch delays, or exits
- +Slower access to new drugs and technology
- −Requires difficult enforcement
- −Faces political, industry, or legal opposition