President Biden took major credit when he announced the first 10 medications to face price negotiations with the Centers for Medicare and Medicaid Services. He embraced the government price-setting mechanism as “a key part of Bidenomics.”
Will Mr. Biden still be crowing when the price controls he and Sen. Joe Manchin made a cornerstone of their “Inflation Reduction Act” don’t work as touted? Will he still praise government price controls on Medicare pharmaceuticals when Bidenomics meets economic reality, as this experiment in socialized medicine plays out?
The Wall Street Journal warns that Mr. Biden’s assertions about the IRA (more aptly the Inflation Stimulation and Innovation Destruction Act) lack candor. “[H]e’s exaggerating the [law’s] benefits while ignoring the larger damage.”
The Journal explains that IRA price controls start with “10 [medicines] this year and a total of 60 by 2029. The law sets the drug price ceiling at between 25% and 60% of its list price, with no price floor. Drug makers that don’t participate or reject the government’s price will incur a crippling daily excise tax that starts at 186% and eventually climbs to 1,900% of the drug’s daily revenues. This is extortion, not a negotiation.” As the Lynyrd Skynyrd song says, you got that right!
Republican leaders of the Senate Finance, House Energy & Commerce and House Ways & Means Committees succinctly summarize the real economic and practical effects IRA drug price controls have already begun to cause: “The ‘Inflation Reduction Act’ (IRA) will raise prescription drug prices–worsen patients’ access to care, destroy new cures before they come to market, eliminate American jobs, threaten the United States’ leading role in innovative research, and create potential constitutional concerns around government overreach.” Ditto the Skynyrd lyric. These adversities will only worsen as price controls expand and IRA robs Medicare to pay for other liberal initiatives.
It’s critical that Americans understand what’s taking place under their noses. The Biden administration’s term “negotiation” is a misnomer. Biopharma innovators whose medicine is targeted must appear before CMS. The exchange over the price Medicare will pay for that drug ultimately comes down to what CMS says the price is—take it or leave it. Leaving it exposes the company to the punitive excise tax the Journal calls “extortion.”
If a mob-run criminal enterprise did the shakedown CMS is doing, law enforcers could throw the book at it and the gangsters would face long jail time, harsh penalties and seized assets.
The Biden-Manchin price control regime assaults property rights, particularly intellectual property. Their socialist approach robs the exclusive rights IP supposedly secures. It’s already driving away investors and upending research developing promising new treatments, especially those that treat or cure more than one disease or cancer.
Price controls will sentence patients to more intensive, expensive measures after their condition has worsened—hospitalization, invasive procedures, longer recovery. Novel medicines that could have been conveniently taken at earlier stages and managed, even cured in some instances, their diseases won’t have been invented. As this escalates government spending on health care, CMS could respond by restricting access to drugs and care.
Early indications are that the public views the Biden-Manchin drug price controls and the IRA more like a bait-and-switch than a set of laws that improves their lives. It seems Bidenomics does little to make citizens better off today than they were four years ago.
New polling shows seniors give the IRA low marks and have high satisfaction with pre-IRA Medicare Part D coverage. A McLaughlin & Associates poll sponsored by American Commitment finds three-quarters consider IRA different from what it was sold as. More than 80% say IRA hasn’t done anything for them, while over 90% disagree with IRA’s diverting Medicare funds to unrelated programs—in the fine print of the partisan law.
A Morning Consult survey for Medicare Today finds 91% of Medicare enrollees satisfied with their pre-IRA-price-controlled Part D drug plan; 86% report their Part D plan yields good value at affordable monthly premiums. This poll reports 2/3 of seniors favor biopharma companies and health plans setting drug prices instead of the government. Four out of five are concerned about government price-setting’s disruption of access to current medications, denial of access to new drugs and interference with their doctor’s best judgment of which medicine is right for them.
CMS lists the blood clot medicine Eliquis as the first of 10 drugs subject to price “negotiation.” CMS spent more than $16 billion for 3.7 million Medicare patients’ prescriptions of Eliquis from June 2022 to May 2023. Eliquis protects patients against stroke, at an average out-of-pocket cost of just $55 a month. The CEO of its maker Bristol Myers Squibb describes eloquently not only the facts CMS and Mr. Biden omit, he also highlights the human and humane elements that price controls and bureaucrats ignore.
These polling benchmarks show voters underwhelmed or worse by Bidenomics’s IRA and very highly satisfied with Medicare drug coverage without government price controls—which IRA is beginning to change dramatically. That combination could cost Mr. Biden votes.
Mark my words: At a minimum, this cruel IRA regime will increase Medicare spending while worsening human suffering.