When it comes to the Inflation Reduction Act’s heavy-handed new authority on drug pricing, there’s one immutable fact to remember and repeat as a mantra: “Price controls equal choice controls.”
The predictable outcome of pharmaceutical price controls is the significant disincentivization of the research-and-development system that makes America the world leader in medical innovation. At the heart of the debate is whether we are going to improve our health care system using smart and evolving free-market principles or go down the sound-bite-laden path of government negotiation (today) and rationing care (tomorrow).
There are many issues and opinions regarding the benefits and risks of direct government negotiations of drug prices. Not surprisingly, where you stand often depends on where you sit. But one key question remains: Is the juice worth the squeeze? And is the imposition of price controls worth the benefit to society?
According to the Congressional Budget Office, direct federal price interference “would have a negligible effect on federal spending.” Unfortunately, when it comes to health care policy, many politicians of the Sandernista School conveniently ignore the facts when they do not suit their political agenda.
Those who do not learn from history are bound to repeat its mistakes. In 2019, the House of Representatives, under then-Speaker Nancy Pelosi, made the Lower Costs Now Act (the infamous HR 3) a top legislative priority. It called for price controls via an international pricing index. Common sense prevailed, and HR 3 was relegated to the ash heap of history.
