Senator Mike Lee (R-Utah) has introduced the Protecting Drug Innovation Act, legislation that repeals Democrats’ disastrous price controls on medicines. These price controls were passed through the Inflation Reduction Act (IRA). ATR applauds Senator Lee and urges all Senators to co-sponsor this important piece of legislation. This bill would protect medical innovation, prevent healthcare spending hikes, and block Democrats’ march towards socialized medicine.
Democrats try to claim the provisions in the IRA would give the Health and Human Services Secretary the authority to “negotiate” the price of prescription drugs on behalf of Medicare. In reality, the Secretary would simply determine the price he or she deems acceptable and impose a steep tax of up to 95 percent on companies who charge more. In 2023, the Secretary would be able to determine the prices of 10 prescription drugs. The determined price would go into effect in 2026. The number of drugs the HHS Secretary could set prices for would then increase to 15 in 2028 and 20 in 2029.
Price controls create shortages and discourage companies from entering the market. In healthcare, shortages and a lack of innovation costs lives. Further, this price control framework will increase healthcare costs, not cut costs as Democrats have claimed its purpose to be.
A CBO report analyzing the proposed price controls in the reconciliation bill found that “about 15 fewer drugs would be introduced over the next 30 years.” While 15 fewer drugs could easily translate into the needless death and/or decline in the quality of life of thousands, this number is a gross underestimation.
Manufacturers will not begin expensive research and development projects if they can expect the government to eat up any profits they make from the medicine. This is especially true for developing treatments for common, but severe, ailments like cancer, diabetes, heart disease, and Alzheimer’s. Manufacturers seeking to cure these diseases understand that they would be the target of a government price control scheme.
As Senator Lee points out, “Price controls never work. Instead, they exacerbate the problems they seek to resolve. Mandating fixed prescription drug prices will ultimately result in the shortening of American lives. Instead of repeating past mistakes, it’s time we address what’s driving the cost of prescription medications and adopt a regulatory environment that works to everyone’s advantage.”
Further, these price controls on medicine will not decrease costs, as Democrats claim. In fact, it will actually increase health spending, one study shows. The study was conducted by Tomas J. Philipson and Giuseppe Di Cera out of the University of Chicago.
In short, pharmaceutical treatments tend to alleviate the need for more expensive interventions like surgeries and hospitalizations. In this way, the introduction of more medicines reduces money spent on costlier interventions, thus reducing total health spending. Because Democrats’ bill discourages the flow of new medicines, it will increase total health spending.
If these price controls both increase costs and lead to a reduction in innovation, what could possibly be Democrats’ goal? For the Left, this is yet another step towards their ultimate goal of socialized medicine.
Congressman Peter Welch (D-Vt.) threatened that price “negotiations” are just the beginning of their crusade against pharmaceutical manufacturers:
“Don’t underestimate the power of the slippery slope. That’s exactly why pharma fights so hard. They know if we get price negotiation, it’s the beginning, it’s not the end.”
Certainly, the Left intends to one day yield control over all drug price setting. It is imperative that we push back now. All lawmakers should support and cosponsor Senator Lee’s vital piece of legislation to repeal drug price controls.