Resisting Price Controls on Prescription Drugs
President Trump has made great strides in dismantling the big-government legacy of his predecessor, Barack Obama. Historic tax cuts, dozens of regulations cut for every new one implemented, and two conservative Supreme Court justices, to name a few.
President Trump’s free-market reforms have proven wildly successful. The economy is growing, and consumer confidence is at historically high levels. This progress makes it even more disappointing to see the White House considering price controls on prescription drugs.
The White House is considering a proposal created by the Department of Health and Human Services to control U.S. prescription drug prices called the International Pricing Index (IPI). This system would determine how much to pay for drugs under Medicare Part B — including vaccines and cancer medications — based on their costs in other countries, including those with socialized health care systems. At the same time, Republican Sens. Scott Hawley and Rick Scott have introduced similarly ill-conceived legislation in Congress.
If it sounds too good to be true, that’s because it is. It would be incorrect to assume other countries have lower prescription drug costs because the markets naturally decided so. The International Pricing Index would be aggregating the drug prices of nations that have already artificially lowered drug prices.
You can’t get something for nothing. The government cannot mandate lower drug prices and expect no consequences in the market. In fact, we have already seen the dangers of price controls in other sectors of the economy, from wages to housing. They interfere with supply and demand, causing waste and shortages.
The prescription drug market would be next. Currently, the United States leads the world in medical research and innovation. Drug makers set prices that allow them to recover the high costs of inventing these new drugs, testing them and satisfying the regulations required to bring them to market. If they cannot afford the costs of inventing new lifesaving drugs, they simply won’t invent them anymore.
Who knows what lifesaving medications and treatments would have been invented if drug companies had the resources to pursue them? The missed opportunities would be devastating. Price controls may feel like a win against Big Pharma, but ultimately, American families who need these future treatments will be the ones who lose the most.
Prescription drug price controls attempt to combat the “global freeloading” of socialist countries by becoming more like them. They alleviate the competition between the United States and other countries by making America less great.
Ironically, the International Price Index is a product of the Center for Medicaid and Medicare Innovation (CMMI), which is turning a blind eye to the damage price controls would have on pharmaceutical innovation. The CMMI was created and placed under the umbrella of the Center for Medicare and Medicaid Services (CMS) when Obamacare was passed.
That’s right — price controls would not only fail to advance the fight against Obamacare, they would be enforced through Obamacare. It’s a bit of a mixed signal, considering President Trump himself has supported the challenges to Obamacare in the courts.
President Trump’s economic success has been a result of reducing government intervention and allowing the markets to operate naturally. Price controls would be a complete about-face from this winning economic strategy.
The Department of Health and Human Services has no business making economic decisions on behalf of the American people. Congress makes laws, and agencies help enforce them, not the other way around. Implementing price controls on pharmaceuticals exceeds the bounds of what the CMMI is allowed to do under law, and doing so would be a step backwards in the fight for a restrained executive branch.
Governing by executive overreach was a hallmark of the Obama administration to achieve policy wins by circumventing the legislative process. If President Trump falls into the same trap, he would be no better than the previous administration.
In President Trump’s 2019 State of the Union speech, he told the American people, “America was founded on liberty and independence. Not government coercion, domination, and control. We are born free, and we will stay free.”
Now, HHS Secretary Alex Azar and big-government Republicans like Rick Scott and Josh Hawley are trying to convince him to break that promise, one price control at a time. Heading into the 2020 election, President Trump must renew his resolve that America will never be a socialist country, and he can start by resisting socialist price controls on prescription drugs.