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Opinion: Democrats hold disdain for the market economy


Sep 5, 2023

President Joe Biden and first lady Jill Biden recently visited Gainesville, Florida to survey the damage caused by Hurricane Idalia. However, their focus has shifted from natural disasters to healthcare policy. Last year, Democrats pushed for government price controls on prescription drugs, assuring the public that it would only apply to Medicare and would be implemented slowly. But this year, they have revealed their true intentions: to have big government set the prices for most new medicines, even those covered by private insurance plans. This reflects their disdain for the market economy and their willingness to hinder private-sector development of innovative medical treatments.

Although Democrats currently lack the votes in Congress to pass their new plan, the fact that they have proposed such legislation is concerning. It should serve as a wake-up call for those who oppose Medicare for All and socialist healthcare. Senate Democrats have introduced the Strengthening Medicare and Reducing Taxpayer Prices Act, which expands the number of drugs subject to government price controls and accelerates the process. Additionally, House Democrats have introduced legislation to extend government price controls from Medicare to the private insurance market. Bernie Sanders has also introduced a version of “Medicare for All” in both the Senate and House. All of these proposals contribute to a plan to nationalize a significant portion of the U.S. economy, resembling a banana-republic style approach.

The implementation of price controls is already having negative consequences. Companies in the life-science industry are reconsidering their research and development projects due to the potential impact of price controls. Alnylam has halted its plans for Stargardt disease. Novartis has discontinued work on certain early-stage cancer drugs. Genentech’s development of a potential treatment for ovarian cancer has been negatively affected. Merck is even taking legal action against the government to stop Medicare price controls on constitutional grounds.

Blaming life-science companies for high healthcare costs is misguided. First, spending on medicines accounts for less than 15% of overall healthcare costs. Second, new treatments ultimately save money in the long run. For example, curing Hepatitis C is more cost-effective than a lifetime of treatments for a failing liver. Third, drug prices decrease over time as generic competitors enter the market. However, if price controls hinder the development of new drugs, there will be fewer opportunities for generic alternatives. One study suggests that the current proposals could result in nearly 140 fewer FDA approvals for new medicines over a decade.

If Democrats were genuinely interested in reducing drug costs rather than consolidating power, they would investigate the role of pharmacy benefit managers (PBMs). PBMs, who manage health insurance formularies, profit by exploiting the list prices of medications, often at the expense of patients. Only 37% of prescription drug spending goes to drug manufacturers, while PBMs disproportionately benefit. Until PBMs’ compensation is disconnected from the list price, patients will continue to pay more than necessary.

While there may be potential for reforming PBMs to address these issues, it is essential to remain vigilant about Democrats’ broader healthcare goals. The proposals currently on the table reveal their desire for government control and the undermining of private-sector innovation in healthcare. As the public, we must pay attention to these intentions and advocate for policies that prioritize affordable and accessible healthcare without sacrificing the development of new treatments.

By Editor

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