On behalf of our member companies that provide more than 1 million jobs in the state and make the New Jersey Business & Industry Association the largest statewide business association in the country, NJBIA is opposed to Senate Bill 977 (Singleton), which would establish a price control for any drug that was developed using research or development that is directly or indirectly supported by the State or federal government.
While on the surface this bills appears to address healthcare costs, a primary concern of our membership, NJBIA believes price controls as set forth in S-977, whether applied to drugs or other consumer goods, are not effective and have many unintended, negative consequences, including stifling innovation and investment in New Jersey.
NJBIA feels that price controls can lead to higher prices in the market due to lack of competition and fewer choices for consumers. Lack of competition, will bring fewer products to market and, as a result, less resources spent on developing products.
When government adopts a price control, it defines the market price of a product and forces transactions to take place at that price, rather than the price set through the interaction between supply and demand. The intersection between consumers and business should determine the price for goods and services, not the government.
Furthermore, we believe this bill will stifle innovation and investment in New Jersey. Once government sets prices of consumer goods below market levels, resources such as talent and investor capital leave an industry to seek a better return elsewhere. This means there will be less research, development and innovation in the state. As a result, fewer new innovative products will become available to consumers.
NJBIA supports innovative collaboration between private industry and New Jersey’s higher education institutions because of the value that they provide through research and development of products. In fact, this R&D is conducted here in New Jersey, it is the source of investment funds, jobs and brings new economic development opportunities to the state. NJBIA feels this bill have a negative effect on this innovative relationship and the state’s economy.
To ensure that New Jersey remains the “Medicine Chest of the World,” investment must continue and the collaboration between the private sector and our higher education institutions must be encouraged to innovate. The result is more innovative products brought to market.
Thank you for the opportunity to comment about our concerns with Senate bill 977.