Biden’s Medicare price control harms many, requires improvement.
The Biden administration recently announced that manufacturers of the first ten medicines targeted by the Inflation Reduction Act’s price-setting provisions have agreed to participate in price negotiations. However, those resisting are subjected to a federal excise tax of up to 1,900% on their US sales. Critics argue this approach will limit access to certain medications, stifle innovation in the pharmaceutical industry, and could lead to a loss of $660 billion in medical research and development by 2039.
Biden Administration’s Price Control Scheme with Drug Manufacturers
The Biden administration recently disclosed an agreement with manufacturers of the initial 10 medicines aligned with the Inflation Reduction Act’s (IRA) price-setting terms. This negotiation scheme could impose a massive federal excise tax of up to 1,900 percent on U.S. sales of selected drugs for non-compliant manufacturers.
This hardline approach could harm American patients by restricting their medicine access, not just the targeted drug companies. The IRA might stifle pharmaceutical innovation, creating potential shortages of essential medicines.
Implications of Price Controls
Historically, price controls have proven ineffective, as they tend to distort resource allocation. In the context of the IRA, the pricing rules undermine innovators who invest heavily in developing novel treatments and cures. A University of Chicago study predicts a loss of $660 billion in medical R&D and around 130 new treatments by 2039 due to the IRA.
Impact on Underserved Communities
The IRA’s adverse effects on American healthcare will likely hit lower-income, minority, and other underserved communities the hardest. Polling suggests that the majority of these Americans oppose laws like the IRA, understanding its potential to delay access to new medicines.
Future of American Healthcare
Despite the potential fallout, the Biden administration continues to implement the IRA. On the other hand, some Congress members propose even more problematic measures, like the SMART Prices Act and the Lowering Drug Costs for American Families Act.
This disregard for patients who will bear the brunt of these policies is alarming. Congress must provide strong oversight to ensure accountability through this law’s implementation, or risk jeopardizing the American healthcare system’s life-saving capabilities.
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