Congress is currently considering a massive multi-trillion-dollar spending package that will not only fuel already high inflation but inject even more government into the healthcare system. The “Build Back Better” package is a continuation of operation healthcare mission creep that is increasingly harming patients.
More specifically, the bill would empower the federal government to purchase some drugs for Medicare at a fraction of the market price. If drug manufacturers don’t like the price point the government is willing to pay, they can be whacked with a 95 percent excise tax. In other words, it’s a deal they can’t refuse.
The government meddling will create a domino effect that adversely impacts more than 200 million Americans who receive private health coverage. Drug companies spend, on average, more than one billion dollars to bring a new product to market. To recoup the investment, losses associated with government price setting for Medicare will be pushed onto employer-sponsored health plans and other private options. That means although some people will be able to access cheaper medicine, others will get hosed with even higher prices.
But don’t worry, Washington has a plan to address the unintended consequences created by government. Hint: It’s more government!
The spending package includes a provision that caps “allowable” price increases on all drugs to the rate of inflation. What happens when drug manufacturers are unable to profit, or even break even, on newly developed products? The free market incentive to innovate and create is weakened and patients would ultimately pay the price. Fewer new therapies, treatments, and vaccines would become available to consumers as the rate of healthcare innovation slows.
More government is rarely the answer to economic challenges. The price of healthcare is no exception. Congress and the Biden administration should reconsider applying price controls on prescription drugs. It will create more problems than it solves.
Read the full op-ed in RealClear Health by Dr. Katarina Lindley, a board-certified family medicine physician, President-Elect of the Texas Chapter of the American Association of Physicians and Surgeons, and a member of the Job Creators Network.