Even as America emerges from the devastation of the COVID-19 pandemic, health care remains a hot-button issue on Capitol Hill and across the country. Although lawmakers widely agree that patients deserve better access to care and lower health care costs across the board, they continue to push failed policy proposals from the past that would have the opposite effect.
Lawmakers are once again pushing for a harmful proposal that would institute price controls to the health care system, giving federal officials broad discretion to jeopardize access to lifesaving medications.
The resurfaced proposal would allow the federal government to tell the private sector what price it must accept for certain drugs under Medicare. Thankfully, these harmful measures have been explicitly excluded from previous legislation or have (to-date) failed to be passed into law. This is mainly because such anti-free market behavior would crush the American innovation Americans depend on, leaving patients more vulnerable than ever.
Back in 2003, Medicare Part D was passed into law as an optional program to help Medicare beneficiaries pay for prescription drugs. Under the program, drug benefits are provided by private insurance plans that receive premiums from both enrollees and the government. Seniors have expressed widespread support of the program, which bolsters competition and drives prices down. Despite this, some lawmakers want to increase government involvement by repealing the program’s non-interference (NI) clause and allowing bureaucrats to set drug prices.
This would be a recipe for disaster.
The NI clause was established to prohibit the Secretary of Health and Human Services (HHS) from interfering in private price negotiations between Medicare Part D plans, drug manufacturers, and pharmacies in the program. NI also prohibits the HHS Secretary from requiring a national formulary – the list of drugs that Medicare will cover. Despite Medicare Part D’s proven success in keeping premiums low and protecting access to needed medications for seniors, lawmakers see intervention as a money-making tactic.
The effort to repeal NI is a back-door opportunity for the federal government to temporarily offset costs of unrelated spending measures by reducing federal support for the care seniors need. Further, not only do most Americans oppose these types of changes to Medicare, but lawmakers within their own parties can barely agree on legislation like H.R. 3, which also includes deceptive government “negotiation” measures. These harmful proposals would have devastating impacts on patients and taxpayers.
Giving the federal government opportunities to interfere in drug price negotiations is a direct assault on the private sector innovation that brought Americans the COVID-19 vaccine in record time. Upending the Medicare Part D model will ultimately skew market forces and disincentivize the private sector, limiting future access to treatment options – pandemic or not.
Policymakers curious to see the impact of these policies only need examine Europe’s tragic decline in healthcare innovation over the past few decades. Before European nations resorted to price-fixing, the continent was a global center for drug innovation and research for new cures. But after an abrupt shift in policy toward more government intervention, the proportion of new drugs created in nations such as France, Germany, and the U.K. has plummeted from 45 percent to 20 percent. Manufacturers ditched the rigid price controls and set up shop in America. But if America introduces price controls of their own, history may well repeat itself.
The Congressional Budget Office recognizes this sober reality, and wrote a letter to House Committee on Energy and Commerce Chairman Frank Pallone confirming that government interference through price-setting would lead to significantly fewer new cures for patients.
Lawmakers supporting the repeal of the non-interference clause and imposition of price controls on medicines for seniors risk jeopardizing the already robust and competitive Medicare Part D system. The long-term effects of these efforts will cripple our healthcare system, moving it ever closer to failed systems abroad and subsidizing poorer health outcomes on the taxpayer’s dime.
COVID-19 has taught the country a few things about what works when it comes to effective healthcare policy. If lawmakers are sincere in their efforts to help patients, then regulatory flexibility and private sector innovation are key to success. Price controls will only result in failure and misery.
This article was originally posted on Price controls are back-door funding scheme at the expense of taxpayers, seniors