How Long before Puerto Rico’s Price-Controlled Medicine Runs Out?
EspañolGovernment just cannot seem to learn that price controls and interventions in the market always do more harm than good. In fact, suppressing the free market by regulating prices is often the exact opposite of what an ailing economy needs.
Few contemporary examples illustrate this more clearly than Venezuela, where price controls and other interventionist policies have led to bare store shelves, a shortage of basic commodities, purchasing restrictions, and the world’s highest inflation rate.
Not to be left out of the conversation, however, is Puerto Rico. The semi-autonomous island commonwealth is jumping on the bandwagon by enacting strict price controls on medications. Some medicines can be prohibitively expensive on the island, but the list of regulated medications is all-inclusive, including everything from the truly expensive Advair inhaler and Lyrica pill, to the more ordinary stomach acid medication Nexium.
On Tuesday, September 9, Puerto Rico’s Secretary of the Department of Consumer Affairs Nery Adames Soto signed Order 2014-14 which will maintain medicine prices at “affordable levels.” During a radio interview on NotiUno, he stated that 72 medications will fall under the new price-control scheme, including many generic versions of popular drugs such as Tylenol.
According to Soto, the government’s regulatory action is a response to dramatically increasing generic drug prices over the last few years. These prices will now remain frozen until a price ceiling is established for generic drugs. According to the report, drugs affected by this legislation include: Advair, Depakote, Flovent HFA, Lyrica, Nasacort, Nasonex, Nexium, Proventil HFA, and Tamiflu.
While few politicians can resist the urge to “help” the public by enacting more government regulation, none seem to realize the disastrous consequences of their actions. Price controls inevitability lead to shortages. When it comes to some of the medications on this list, such as Advair and Flovent, which are used to treat breathing disorders, a shortage could present life-threatening situations for patients in need.
While there is no question that some of these medications are expensive, forcing price controls on manufacturers and retailers is a recipe for disaster.
The disconnect stems from Chavistas within the current Popular Democratic Party leadership in Puerto Rico. These proponents of Venezuelan-style “social democracy” ignore decades of evidence detailing the most destructive economic system of the 20th century. Unfortunately, the evidence does not appear to dissuade a growing list of supporters for centralized government control on everything.
Meanwhile, these failed economic policies will continue to take their toll on Puerto Rico. A recent report in Caribbean Business indicates a decrease in hiring over the next quarter. This spells bad news for an island already saddled with a 13 percent unemployment rate, and actual unemployment closer to 65 percent. Currently, less than one million of the island’s 2.2 million potential workers are employed.
Puerto Rico already faces a dwindling population, and the commonwealth cannot afford to make life even more difficult for islanders.