Biden-Harris Administration price-fixing scheme is stifling development of new cures
Tomorrow marks the two-year anniversary of the misnamed Inflation Reduction Act (IRA). The law has had little impact on inflation but has had a big impact on the pharmaceutical industry; just not in the way that the Biden-Harris Administration would have you believe.
According to recent reports, the IRA’s drug price-fixing scheme is leading to significant reductions in research and development (R&D) investments by major pharmaceutical companies. It’s also driving up the cost of prescription drug coverage for seniors.
While the current President and Vice President tout “savings” from their price controls that could materialize in two years, the law is already taking future treatments off the table.
One of the most alarming new trends is a noticeable reduction in R&D budgets across the industry. Pharmaceutical companies, facing government pressure to drastically reduce prices, are scaling back their investments in new drug development – a situation experts warned would occur.
This reduction in R&D is a direct response to the reduced profitability anticipated under the administration’s price controls. Drug development is an expensive and risky endeavor, often costing billions of dollars and taking years to bring a single drug to market. With less money going to R&D, fewer innovative treatments will be developed in the future.
The impact of these cuts is multifaceted. First, it jeopardizes the development of new drugs that could address unmet medical needs. Diseases like Alzheimer’s, cancer, and rare genetic disorders require ongoing – and expensive – research to find effective treatments. Without sufficient funding, the pace of innovation in these critical areas could slow dramatically. This not only affects patients who are waiting for new therapies but also the overall progress of medical science.
At the same time, slashing R&D spending likely leads to job losses within the pharmaceutical industry. R&D departments are major employers of scientists, researchers, and other highly skilled professionals. As companies cut back on their research efforts, many of these jobs are put at risk, leading to a loss of talent and expertise in the field.
There are also broader economic implications. The pharmaceutical industry is a significant contributor to the economy, not just in terms of employment but also in terms of its impact on related sectors, such as biotechnology and healthcare. Reduced R&D spending could lead to a slowdown in the growth of these sectors, affecting the economy at large.
Lastly, there’s the pocketbook effect. The IRA is making Medicare Part D prescription drug coverage more expensive. According to the Wall Street Journal, “insurers report that many Part D plan premiums will rise far more than 6% next year,” when the IRA’s “redesign” of the program takes effect. Medicare’s actuaries estimate the average cost of providing drug coverage will rise from $64.20 to $179.45 a month — a 179% increase.
In a politically-motivated move designed to mask the pain of these Medicare premium spikes, the Biden-Harris Administration created – with no input from Congress – a $70 billion, three-year “premium stabilization” program specifically for Medicare Part D plans.
Says the nonpartisan Paragon Health Institute, “this ‘premium stabilization’ represents a massive bailout to insurers to paper over the increased costs of the Inflation Reduction Act.”
While trying to save Americans money on their prescription drugs is commendable, the Biden-Harris Administration’s price-fixing approach is deeply flawed. Price controls stifle innovation and hinder the development of new, life-saving treatments. Higher premiums and a reduction in pharmaceutical R&D spending are just the early warning signs that government price controls won’t work and could end up harming millions of people.
Americans can’t afford government price controls. You should be in charge of your medicine cabinet, not politicians. A Personal Option would bring you the medicines you need at prices you can afford.
Learn more about how the Personal Option, not price controls, is the solution to high drug prices. https://americansforprosperity.org/blog/the-personal-option-not-price-controls-is-the-solution-to-high-drug-prices/
