Financial proponents - Innovation. Financial rewards have always been a significant motivation tool. It is a powerful incentive that has pushed companies to innovate and, as a result, has materialized some of the most innovative drugs in history. Innovation is very powerful but often comes at a high price. By imposing a price cap on drugs, it also puts a brake on the emphasis and application of innovation in the sector. Research and development (R&D) of any drug is a long and expensive process, fraught with uncertainty. While most costs are carefully calculated, unexpected obstacles will always arise in the process that will require additional expenses to resolve. It is imperative to incur these extra expenses to get ahead, but in a price-controlled environment, this would also mean decreased profits for producers. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an original essay Typically, the most innovative drugs are the ones that require the most investments, but even so, not all heavy investments guarantee successful products and therefore, it will always be a risky bet. This is difficult for pharmaceutical companies as they require a certain degree of financial freedom to cover costs in order to explore different areas of medicine and research. To be incentivized to do so, companies need to know that they will be rewarded accordingly. An example of this is the ongoing research and development efforts for severe sepsis. This condition affects 500,000 people each year worldwide and has a mortality rate of 35-50%, but despite decades of research no promising treatment has been discovered (Calfee 1060). Only in the last few years has a clinical trial shown some progress in a treatment that significantly reduces mortality rates. If the companies had given up, they would not have discovered this cure that is now saving thousands of people. Although research and development for this condition has been challenging, many pharmaceutical companies have been at it for decades because they all possessed the “small chance, high profit” mentality (Calfee 1061). Companies pursue research and development for less common but more challenging conditions because, if successful, they receive the patented right and exclusive ability to control the prices of their drugs. However, they also understand that if they fail, they will likely not be able to recover their costs (Calfee 1061). With a cap on drug prices, the incentive to innovate would be eliminated because the risks and benefits are not aligned. From a business perspective, there is virtually no reason to invest heavily in research and development for a cure that has a low risk of success and low returns relative to the investment. This logic was demonstrated in a health plan proposed by the Clinton administration in 1993. There was a provision in the plan to implement price caps on all innovative drugs (Calfee 1063). Over the next two years, while this idea was being discussed, the nation's annual spending on research and development by pharmaceutical companies had already decreased by 7%. (Calfee 1063). Evidently, businesses have become reluctant to spend as uncertainty about cost recovery in the future has increased. The idea of ​​a price ceiling led to lean accounting, and companies' desire to innovate ultimately diminished. Innovation is the primary driver of many medical breakthroughs and price caps will have negative effects on the progression of this industry.