Biden’s Drug Price Controls Would Make Americans Sicker and Shorten Their Lives
Part of the way that the Biden administration and congressional Democrats want to pay for their $3.5 trillion social welfare “infrastructure” plan is by forcing pharmaceutical companies to lower the prices they charge the government for their medications. Democrats argue that benchmarking the prices paid for certain prescription drugs to prices paid by other developed countries will offset around $500 billion in government spending over the next ten years. Voilá—one-seventh of their infrastructure plan would be paid for.
First, I have been highly critical of pharmaceutical industry shenanigans such as paying off would-be competitors to delay introducing generic versions of their patented drugs and making minor tweaks to the formulations of their drugs as a way to drag out their patent protection beyond the 20 years they are granted. Some of the Biden administration’s proposals are aimed at fixing those problems. So far so good.
However, imposing price controls on drugs is central to Democrats’ plan to “save” $500 billion as a way to finance their massive new bill. Congress is supposed to authorize the secretary of the Department of Health and Human Services (HHS) to negotiate prices for medications with pharmaceutical companies. “An effective negotiation policy must establish criteria for market failure, define a fair price, provide the Secretary with tools and guidelines to negotiate a fair price, and incentivize pharmaceutical companies to participate in the negotiation process,” states the HHS comprehensive plan. In addition, the negotiated (controlled) prices would not just be limited to government purchases, but also to commercial distributors and insurers.
Just how will the HHS “incentivize” companies to negotiate, i.e., lower their prices? Most li
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