Lifesaving Drugs are Already in Danger, and Biden’s About to Make it Worse

It’s been less than a year since President Biden signed the disastrous Inflation Reduction Act (IRA) into law, yet the law’s dangerous drug pricing measures have already slowed healthcare innovation. Now, the Biden administration is poised to double down on its attack against lifesaving cures. It’s time for a reality check.

Among the IRA’s many dubious policies are dangerous drug pricing provisions that are already upending our healthcare system by causing companies to drastically cut investments in medical innovation.

The law effectively implemented perilous drug price controls on a set number of prescription drugs. President Biden recently unveiled his new budget, which would drastically expand the list of drugs subject to government price fixing. This would make matters much worse for taxpayers, consumers and for the next generation of life-saving drugs.

Price controls on prescription drugs undermine the incentives for private companies to innovate and provide American patients with lifesaving treatments. Pharmaceutical companies take great financial risk when they provide upfront research and development (R&D) investments. The average new drug production cost is around $1 billion to $2 billion. Companies take this massive risk with the hope that they will receive a return on the investment in the long run. Government price controls steal these long-term returns.

The government’s new prescription drug price fixing scheme is already discouraging investments in R&D and devastating the biomedical research needed to increase patient access to lifesaving drugs. For example, several companies announced changes to their drug development programs in response to the impending price controls. Bristol Myers Squibb recently announced their plans to cancel certain drug development programs as a result of drug pricing controls. These cuts hit cancer drug development the hardest. Eli Lilly also announced cuts to the development of a new blood cancer drug, and AstraZeneca said in November that they would reconsider the launch of certain cancer drugs in the United States in response to the IRA.

These examples provide a glimpse into the damaging impact that more price controls on prescription drugs will have on medical research and patients. This type of policy is a betrayal of America’s historical leadership in medical innovation. The U.S. produced 138 of the new biologics created between 2016 and 2020, far outpacing Europe, the U.S.’s nearest competitor, which produced only 64 in the same period. This competitive advantage shows that the U.S. system, without government price controls, is best positioned to deliver for patients.

The canceled drug launches and R&D projects also expose the IRA’s corrosive effects on the healthcare system’s many strengths. One only need to look to Canada to see how this story ends. Canada’s price controls severely restrict treatment options and cause shortages. Canadians had access to fewer than half of new medications between 2011 and 2018, while American patients had access to nearly 90 percent of these new drugs. This example alone should give lawmakers pause. Price controls have a clear cost, yet President Biden is poised to further repeat this policy mistake.

The government’s interference in prescription drug pricing is already a ticking time bomb for America’s vital healthcare system and Biden’s budget would speed up the countdown. The law is forcing companies to cancel important projects and is leaving patients without access to the treatments they need. The U.S. cannot afford to give up its healthcare advantages, which give citizens access to the best quality medical care. Lawmakers must stand strong and prevent a further slide down this slippery slope. 

David Williams serves as President of the Taxpayers Protection Alliance.