Drug Price Controls in Inflation Reduction Act Will Do More Harm Than Good – Opinion

(The opinions expressed in guest op-eds are those of the writer and do not necessarily represent the views of RedState.com.)

A 730 page spending bill, which was passed by Democrats without any Republican votes, is now in place eighty-eight business days before the midterm elections. It is aimed to fulfill unfulfilled promises to demoralized progressives. At  $737 billion in new revenue, the bill weighs in at just over $1 billion/page.

The cost of spending that much money is enough to satisfy a large wish list. The bill does just that with its subsidies for everything, from vaccinations to solar panels. It is foolish to try and grow government in an economy downturn just for the sake vote harvesting. The worst part of this bill is absolutely unnecessary.

Democrats have threatened Big Pharma over the decades to impose price controls on certain drugs. However, rational people from both sides have been able convince anti-pharma activists to accept that the execution of that golden goose would also cause untold suffering and death for a large number of patients. It is now done. This bill includes price-setting provisions that will effectively stifle the U.S. pipeline for drug innovation. The United States has been a leader in the development of miracle cures that save lives and ease suffering for 75 years.

The bill’s subsidies, which were intended to aid middle-income individuals in purchasing health insurance during the pandemic, were maintained. Democrats on the ballot could have been punished for 13,000,000 people getting premium increases in the weeks leading up to the election. This and many other popular items could have been passed by congressional leaders without drug price control. Senate talking points on the bill mention health insurance subsidies last, almost as an afterthought, below punishing the health care industry because they “rake in huge profits and negotiate secret discounts and agreements.”

In an August 4 letter to legislative leaders, the Congressional Budget Office warned: “The inflation-rebate and negotiation provisions would increase the launch prices for drugs that are not yet on the market relative to what such prices would be otherwise.”

The University of Chicago’s Freidman Institute found that price controls within the first version of this bill (HR3) would mean “254 fewer new drug approvals.” The next breakthrough for Alzheimer’s or cancer could have been one of those drugs. Inexplicably, price controls are used to stop research and development in America, which is the source of all medical innovation in the world.

A recent Penn-Wharton Budget Model analysis of the Inflation Reduction Act found that the effect on inflation will be “not statistically different from zero.”  Unfortunately, we now live in an upside-down political world where everyone can pretty much agree that the Inflation Reduction Act will not lower inflation. We have not yet crossed the line into self-harm, however cynical things may seem.

It will take many years for the devastating effects of price control policies that kill research to be revealed. Democrats are a cheap talker who will lose no votes and save no money.

Matt Dean ([email protected]) Senior fellow in health policy outreach at The Heartland Institute.

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