Inflation Reduction Act Will Destroy Drug Access

Last month at a White House event, President Joe Biden and Sen. Bernie Sanders, I-Vt., took a victory lap for supposedly having "beat Big Pharma" through drug-pricing provisions in the Inflation Reduction Act. Beaming with pride, they hailed new powers for Medicare to "negotiate" drug prices as a historic achievement.

But their self-congratulation rests on a false premise. Far from being a big win for Americans' health, the IRA bankrolls billions of dollars' worth of left-wing policy priorities at the expense of life-saving pharmaceutical innovation and seniors' access to new medicines.

Worse, Biden and Sanders are pushing to expand the IRA's drug-price provisions further. Doubling down on failure will only compound the damage.

Let's be clear. The IRA's so-called "negotiation" process is anything but. These are price controls, plain and simple.

The bill forces drug companies to participate by threatening them with an excise tax of up to 95%. A massive new $3 billion bureaucracy within the Centers for Medicare and Medicaid Services is tasked with enforcing these new "negotiated" prices.

The price-setting was sold on false pretenses. Biden and his allies claimed that redirecting over $200 billion in Medicare spending toward progressive boondoggles like green energy subsidies would make medicines more affordable with minimal tradeoffs.

Even the Congressional Budget Office estimated that the new IRA rules would only prevent a handful of new drug approvals over a decade.

But those rosy predictions are proving wrong. An analysis from the University of Chicago found that IRA-style price controls could siphon $663 billion from drugmakers through 2039, slashing the number of new drugs that come to market by 135.

The authors also found that research and development spending could plummet nearly 20%, delaying new medicines by up to seven years.

And the news is already packed with stories of drug companies shelving promising research projects thanks to the IRA.

Yet the White House now wants to intensify its crackdown on medical innovation. Biden's latest budget proposal would make many more drugs eligible for price controls — and much sooner than currently allowed.

A study by the healthcare consultancy Vital Transformation found that the proposed expansion could result in some 230 fewer new drug approvals over a decade, with the impacts most heavily felt in such areas as neurology, oncology, and infectious disease. That would mean fewer new treatments for major killers like Alzheimer's, cancer, and viral infections.

The long-term consequences of this White House crusade would be dire.

Between 2012 and 2021, 460 new drugs came to market across 20 large economies, of which 78% were available in the United States within one year of launch.

By contrast, access in Europe is dismal. The percentage available within one year of launch was 44% in Germany, 38% in the United Kingdom, 23% in France, and 17% in Italy.

Through their penny-wise, pound-foolish approach to price controls, European governments have denied their citizens access to life-saving medicines.

A report from the European Union found that in 2021, nearly 400,000 deaths could have been avoided if healthcare systems had offered timely and effective medical treatments.

In seeking to tame health costs, we mustn't stifle the very innovation that saves lives. Just as they do abroad, price controls here will inevitably lead to scarcity and suffering.

The damage would extend far beyond the clinic. America's vibrant biopharmaceutical sector supports millions of high-paying jobs and over a trillion dollars in annual economic output. Sacrificing this asset to win political points would be an act of economic self-sabotage.

President Biden may believe he's scoring a win against "Big Pharma," but the real losers will be generations of patients. Once drug discovery stalls, the human toll will be incalculable.