top of page

BBB’s Dead; Socialist Price Controls Still Breathe

One thing that remains on the table for many in Congress and the White House is certain to damage some treasures of America’s health system. In the name of “lowering drug prices,” government price controls will wreck the mechanisms that spark U.S. biopharma innovation.

There’s nothing “moderate” or “reasonable” about any of the government price controls Washington’s considering. They snatch private property and deny property rights. They open the door to socialized medicine.

Even after “Build Back Better” stalled, the kind of government-imposed market disruptions that characterize socialized medical systems could well become part of comparatively smaller social spending legislation.

Don’t miss the fact that, along with child care and eco-extremism, BBB drug pricing retreads still threaten the discovery and development of many new medicines.

The proposed price controls rest on a flimsy foundation. It isn’t pharma innovators that collect all the money spent on pharmaceuticals. Half of “drug spending” goes to payers, providers and middlemen. And the generic drugs that comprise 90 percent of prescriptions don’t get developed without novel brand drugs and their time of exclusivity.

On the table: Putting bureaucrats into direct price “negotiations” with biopharma companies, just as socialized medical systems have. There, the government sets artificially low prices for drugs, and drugmakers must take it or leave it.

The government-set prices will apply to government programs like Medicare as well as to private health plans. A pharma innovator that declines the “negotiated” price could get slapped with a 95 percent excise tax on the drug.

Confiscatory taxation of medicines drains the incentive and the R&D money essential to creating new drugs to fight diseases.

They will drastically change Medicare Part D, the highly popular, market-based drug benefit, and spill over into private coverage. Sucking the profits out of top brand drugs forces the reduction of drugs Part D plans could cover.

Part D plans will probably start looking a lot more alike—erasing the consumer choice and competitive nature of this program. The same shrinkage will happen in private insurance.

Thus, government price-fixing on leading brand medicines, a 95 percent punitive tax and fewer new treatments in the pipeline and on insurers’ formularies—with those that are on the list at the dictated price returning far less research funding—will harm health plans and Part D, seniors and other patients who need cutting-edge drugs to stay out of the hospital.

This isn’t conjecture. It isn’t scare-talking. It’s a cautionary tale because these kinds of harms have happened in Europe and socialized medicine countries.

Where governments have imposed price controls on medicines, it’s resulted in reducing innovation and limiting access to medicines. A new report finds that for each 10 percent reduction in drug prices in Europe, there is an 8 percent delay in access to medicines.

That is, government price controls delay drugs’ market entry. And they’re usually accompanied by rationing of prescription drugs.

If you like the jobs and economic contribution of the biopharma sector, then be careful what you wish for with drug price controls. Such European price controls cause venture funding in drug R&D to fall 14 percent. Drug price controls of that magnitude reduce biotech startup funding by 9 percent and biotech patents by 7 percent.

Biopharma is an IP-intensive sector. IP-centric industries devote more resources to R&D. They outperform non-IP-intensive industries across key economic metrics, including higher wages and job creation.

If you like how U.S. biopharma firms could quickly marshal their decades of research and drug innovation amidst the COVID-19 pandemic and deploy three highly effective and safe vaccines, then know Congress’s drug price control plans threaten future miraculous performances. IP exclusivity and comparatively more market elements in our health system benefited Americans and the world with this scientific success.

The COVID vaccines have benefited our economy. These medicines contributed to the generation of $438 billion that without the vaccines would have been lost. That’s 2.3 percent of 2021’s real gross domestic product.

Drug price controls would slow drug development, foreclose exploration of many promising new molecules and leave more people exposed to infection and illness—time away from working, lost productivity, more spent on avoidable medical costs. Costly, indeed.

Recent Posts

See All

On World IP Day, Appreciate IP's Economic Benefits

World Intellectual Property Day, Friday, April 26, offers the opportunity to reflect on the importance of intellectual property rights to a healthy, functioning society. Strong IP protections are vita

The Piracy Website-Blocking Solution

Digital commercial piracy costs the United States economy at least $29.2 billion a year. That is, if commercial piracy websites paid for the content they’ve illicitly streamed, creators of music, movi

Bernie Convenes a Gang Beating

Senate HELP Chairman Bernie Sanders has kept busy strongarming biopharma company executives. Sanders threatened to subpoena those who wouldn’t willingly submit to a public flogging in his star chamber


Commenting has been turned off.
bottom of page