Watchdog Group Blasts New Drug Price Controls

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

WASHINGTON, D.C. – Today, the Biden administration announced the first 10 drugs that will be covered by a sweeping new price “negotiation” program under Medicare. The Taxpayers Protection Alliance (TPA), a nonprofit, nonpartisan taxpayer and consumer watchdog organization has long warned that such negotiations are nothing more than thinly veiled price controls, imposed by executive fiat. They will reduce access and stifle innovation in the pharmaceutical sector. This will impact all Americans, not just Medicare patients, as Health and Human Services (HHS) officials have previously bragged about the spillover effects into the private market.

Taxpayers Protection Alliance (TPA) Executive Director Patrick Hedger provided the following comments:

“The Biden administration continues to ignore the fact that prices are merely signals of other underlying factors. In the case of prescription drugs, the number-one underlying factor is the billions of dollars and decades it costs to have a single drug clear regulatory hurdles at the Food and Drug Administration (FDA). Another major problem is price controls imposed by other countries. The administration is choosing to ignore economics and attempt to mask the symptoms, changing prices without changing the underlying conditions. This is the equivalent of putting sticker over your check engine light and continuing to drive down the road.

“Everyone acknowledges that prescription drug prices, and medical costs in general, are too high and that Americans effectively subsidize pharmaceutical research and development for the rest of the world. These are problems that can be fixed with the right focus and effort. The Biden administration has instead chosen an intellectually cheap, populist idea floated by the previous administration.

“Yet, if the response to Covid-19 taught us anything, it is that the FDA imposes needless costs and the drug approval process can be streamlined with great benefit and minimal cost. The Biden administration could also pursue trade deals with other nations that eliminate price controls on American pharmaceutical innovators. Instead, the administration thinks it can impose effectively the same price controls seen overseas without the same consequences, which are reduced investment in pharmaceutical research and development and significantly lower access to new treatments.

“The idea of price ‘negotiations’ for drugs with the entity that holds all the power over the pharmaceutical industry is laughable. HHS officials can impose a 1,900-percent excise tax on the sales of companies that don’t bend the knee. From patents to FDA approval and countless other regulatory mechanisms, the federal government holds all the power at the so-called negotiating table with companies that often produce a host of products beyond pharmaceuticals. Simply demanding lower prices, and therefore ignoring the role of prices, will mean for Americans what it means elsewhere: fewer new treatments and less access to the ones that miraculously make it to what’s left of the market.”

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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.