After unveiling a $2 trillion tax hike and “infrastructure” plan, President Joe Biden is expected to unveil another $1 to $2 trillion spending plan in the coming weeks that will include foreign price controls on the American healthcare system.
Recent reports indicate that House Democrats are pushing to include “The Lower Drug Costs Now Act,” legislation that will force pharmaceutical manufacturers to accept government-set prices as dictated by foreign countries and federal health bureaucrats or pay a 95 percent excise tax on hundreds of medicines. While this bill has not been introduced this year, it was designated as H.R. 3 in the last Congress.
Lawmakers should reject this radical proposal.
In 2019, as Democrats were working to pass H.R. 3, ATR led a coalition letter signed by 71 groups and activists urging Members of Congress to reject the proposal.
The letter was signed by federal and state organizations including the American Conservative Union, National Taxpayers Union, Heritage Action for America, Club for Growth, Council for Citizens Against Government Waste, FreedomWorks, Taxpayers Protection Alliance, Small Business Entrepreneurship Council, and the Competitive Enterprise Institute.
H.R. 3 would impose foreign price controls through a system of international reference pricing. This would set prices based on the prices of foreign countries which utilize socialist price controls. As the letter notes, these price controls will reduce access to new medicines:
“The bill imposes new government price controls that would decimate innovation and distort supply, leading to the same lack of access to the newest and best drugs for patients in other countries that impose these price controls.
A study by the Council of Economic Advisors estimated that H.R. 3 would lead to 100 fewer lifesaving medicines over the next decade and could reduce life expectancy of the average American by four months.
The legislation enforces these price controls through the creation of a 95 percent excise tax imposed on hundreds of life-saving and life-preserving drugs including cures for cancer, hepatitis C, epilepsy, and multiple sclerosis. As the letter notes:
“Pharmaceutical manufacturers would face a retroactive tax of up to 95 percent on the total sales of a drug (not net profits). This means that a manufacturer selling a medicine for $100 will owe $95 in tax for every product sold with no allowance for the costs incurred. No deductions would be allowed, and it would be imposed on manufacturers in addition to federal and state income taxes they must pay.”
The fact is, the American people do not want price controls and socialist healthcare. Congressional Democrats ran on H.R. 3 in the 2020 election and hammered Republicans that voted against the proposal claiming they were obstructing efforts to lower prices.
However, voters were not fooled. Instead, they punished swing-state Democrats over their support for socialist policies, including price controls on prescription medicine.
As lawmakers begin taking up Biden’s next major legislative package, they should reject any effort to adopt H.R. 3 in part or in full and should stand against price controls and taxes on American medicines. Conservatives strongly oppose these policies and the effort by the Left to increase the power the federal government has over the healthcare system.