Eminent Domain Won't Lower Drug Prices, Might Raise Costs

Amy Kapczynski and Aaron Kesselheim proposed in Health Affairs that the federal government reduce the price of on-patent prescription drugs using an obscure federal law (codified as 28 USC 1498) to either threaten to, or actually, seize patent rights to drugs in a manner similar to eminent domain. The idea is that the federal government would “produce or import low-cost versions of patented medicines” itself, while paying the drug company that previously controlled the patent “reasonable and entire compensation” according to some vaguely measure.

In response, Henry Grabowski provided a detailed analysis based on decades of evidence demonstrating that such a proposal would decrease pharmaceutical innovation, in part by decreasing industry revenue, and thus the resources available for innovation.