If anyone had any doubt that the Biden administration and the Left are hellbent on a government takeover of health care, they need only read the new lawsuits against the Medicare prescription drug “negotiation” provisions Democrats in Congress rammed through last year. Those suits lay out in exquisite detail the ways in which progressives want to micro-manage the health care system.
In recent weeks, several drug manufacturers and the U.S. Chamber of Commerce have filed suits in federal court seeking to halt the drug “negotiation” provisions. The suits explain how the federal government is unconstitutionally attempting to dictate prices via what amount to socialistic price controls.
The lawsuits explain how the government dictates every step of the entire “negotiation” process. The law specifies that manufacturers must “agree” to enter into a process that will culminate in a “maximum fair price” that is between 25-60 percent below the current market price. The entire “negotiation” will take place in secret, with manufacturers obligated to hand over to federal authorities any documents Washington bureaucrats request.
If manufacturers fail to participate in this “negotiation”—which guarantees a reduction of at least 25-60 percent of their revenue—or fail to “agree” to these unilateral price cuts, the companies will face ruinous levels of taxation. Specifically, they will face taxes of up to 1,900 percent—19 times the underlying drug’s price.
This process amounts to a “negotiation” in the same way The Godfather makes offers to his “business partners” that they can’t refuse. Indeed, congressional scorekeepers concluded that the tax penalties would generate no revenue—they would place such an onerous burden on companies that they will have no choice but to accept the government’s demands.
As much of an unconstitutional power grab as this new scheme represents, the real harm will come to patients. Washington bureaucrats imposing price controls sounds like a no-brainer, one in which only pharmaceutical companies lose.
But drastically cutting revenues also means drastically cutting research into the new treatments that can extend, or even save, lives for millions of Americans. For instance, the Food and Drug Administration just approved the first gene therapy to treat a form of muscular dystrophy in children.
In the nearly six years since the FDA approved the first gene therapy, we have seen the promise and potential of this new technology. But by imposing unilateral and arbitrary price controls, Democrats’ new “negotiation” regime will undermine the revenue streams that can make the promise of innovative therapies a reality. As appealing as it sounds, this “negotiation” mechanism amounts to the killing the goose that lays the golden egg for American patients.
And where did all the savings from these de facto price controls go? Not to preserve Medicare—a program scheduled to become insolvent in just a few short years. Instead, Democrats diverted the savings to fund 87,000 new IRS agents and a variety of climate pork-barrel projects. You read that right: Democrats took money allocated to health care for seniors and redirected it into subsidies for expensive Teslas.
Diverting Medicare funds for climate pork sounds like bad policy—and it is. But it merely reflects how the Left views government as its personal plaything, full of slush funds it can plunder as it pleases. Unfortunately, however, American patients will suffer the harm from this bad policy prescription.
Mary Vought ( @MaryVought ) is the founder of Vought Strategies and a senior fellow at the Independent Women’s Forum.
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