TPA Statement: Government Price Controls on Prescription Drugs Are Enforced, Not Negotiated

For Immediate Release                                     Contact: Courtney Mattison: (202) 525-7492   

WASHINGTON, D.C. – The Biden administration announced that the manufacturers of the first ten drugs selected for the Inflation Reduction Act’s (IRA) price negotiation program under Medicare agreed to participate in the process. In a September 11, 2023 op-ed, TPA noted, “Basic economics says that when a product’s production costs rise and its sales revenues fall, firms will produce less of it. By excising manufacturers’ incentive to produce, price controls invariably lead to stunted innovation, worse product quality, and supply shortages. The pharmaceutical industry has no special immunity from this basic economic phenomenon. Manhandling markets and distorting prices seldom produce the economic benefits technocrats promise. The IRA [Inflation Reduction Act] has joined such economic illiteracy with obfuscating language and constitutional violations. The law’s pharmaceutical price-fixing deserves to meet its doom in court.”

Today, Taxpayers Protection Alliance (TPA) President David Williams provided the following comments:

“Medical innovators today are stuck between a rock and a hard place, as they find themselves participating in Medicare’ negotiations’ primarily because it’s their only viable option. The threat of hefty excise taxes and penalties backs this current path of price-setting provisions. Agreeing to the price controls set by the Biden Administration is not a negotiation; it’s a demand by an administration that continues to weaponize its power in multiple aspects of American life. There is very little that’s voluntary about participating in this process. Companies now have to play ball, stifling innovation and access to new treatments to the detriment of patients and taxpayers. Americans could soon see their healthcare options restricted to the same limited access seen in healthcare systems abroad.

“The Biden administration’s fixation on price controls sidesteps the complex realities behind rising drug costs. Rather than tackling the root causes, this agenda ignores those root causes while trying to fix the symptoms. It increases government intervention at the expense of patients and their access to quality care. Taxpayers and consumers understand that healthcare costs today are sky-high. Government intervention that threatens critical research & development (R&D) in medicine would only create a host of new problems while failing to fix the underlying issues.”

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Taxpayers Protection Alliance (TPA) is a non-profit, non-partisan organization dedicated to educating the public through the research, analysis and dissemination of information on the government’s effects on the economy.