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In his 2019 State of the Union Address, President Trump triumphantly proclaimed, “America will never be a socialist nation.” This line drew raucous applause from many in the House chamber and, surely, from many sitting and watching at home.
This is only natural. Socialism has failed wherever it’s been attempted. The President was right to try and eliminate this destructive ideology from the American lexicon. Even socialistic programs implemented in otherwise free nations have brought scores of hardships onto the people living under them. One such program is the institution of price controls on prescription medication.
These controls greatly restrict the quality of healthcare wherever they exist. A recent study using data from the National Institutes of Health found that if all developed nations that have price controls lifted them, it would lead to drastically increased investment into pharmaceutical research and development. This increased investment is projected to yield the development of eight to thirteen new medications per year over the next decade. One shudders to think of how many people are waiting for medicines that won’t come until years too late because of these measures.
President Trump cannot forget the promise he made a year and a half ago. An executive order implementing price controls on prescription medication within Medicare Part B is socialism. This, to put it bluntly, would be a monumental mistake. We should all be cheering for him to make the right decision.
In late 2018, the Department of Health and Human Services scuttled a similar proposal. That one would have capped the prices of drugs in the program at no more than 50 percent higher than the rest of the developed world. While it sounds reasonable, this would be like trying to free-ride off of countries that are already free-riding off of the United States. It’s the equivalent of attempting to plug an extension cord into itself and expecting to generate power.
Furthermore, there is a reason the U.S. pays significantly more than the rest of the world for prescription medicine. The quality of care is better here. Americans typically get access to new drugs before the rest of the world. Americans are also not subject to the drastic wait times and drug shortages that you’ll find in nations that do have price controls. We pay more because we are getting a better deal.
This latest proposal, expected this week is even more dangerous than the prior one. This includes a “most favored nation” provision. While it sounds like a sweet deal for the country, it is the exact opposite. This provision essentially requires that the U.S. have the strictest price controls in the world. It goes further than the idea regulators had thrown away as unreasonable not more than a year and a half ago. This would not make America the “most favored nation.” It would make us the least attractive nation for pharmaceutical innovation.
This is an especially foolish thing to do in the middle of a global pandemic. It is especially foolish considering this global pandemic is taking place in the middle of a pivotal presidential election cycle. Implementing price controls is one of the few things that could actually stifle the progress being made towards the development and production of a vaccine for this coronavirus. That vaccine would allow millions to get back to their livelihoods.
With luck, America will stave off the growing appetite for socialism being seen in many public figures on the left. It can only do so by avoiding proposals like the one the White House is putting forth now. President Trump should keep his promise to keep destructive socialist policies like these away from our great nation.
*Adam Brandon is President of FreedomWorks. *