Why Does Price Control Policies Do Not Apply in the US Pharmaceutical Market, as Opposed to Many EU Markets?

Abstract

The pharmaceutical market is always the most profitable industry in the US, and private companies dominate the healthcare market. The US ranks the highest globally on healthcare spending due to the high price of healthcare. As a result, American citizens face increased difficulties affording basic health insurance. The main reason behind this problem is that the US does not apply price control policies. Compared with the US, most EU countries’ pharmaceutical markets have government interventions, such as price control policies; hence EU countries have a much lower amount of healthcare spending. This article describes the history of pharmaceutical markets in the US and EU and analyzes why the US does not apply price control policies. This article also critically elaborates on the positive and negative implications of why the US does not apply price control policies. Although there are many benefits to the US does not apply price control policies in the pharmaceutical market, in this research, the disadvantages of applying price control policies outweigh the benefits. As the US does not apply price control policies, this would lead to a higher profit for pharmaceutical companies. In addition, this likely incentivizes pharmaceutical companies to dedicate more funds to research and development. In the long term, without price control policies in the US could increase human longevity.