If Washington Wants to Lower Prescription Drug Costs, It Should Get Out of Its Own Way

While Washington debates policy, every day Tennesseans are hit with rising healthcare costs—insurance premiums are increasing, hospitals are raising prices and it gets harder and harder to access prescription drugs because of insurance hurdles that patients have to overcome—like fail-first policies and step therapy.

For seniors on fixed incomes, parents trying to make ends meet, and patients who depend on lifesaving medications, pharmaceutical drugs are a significant financial burden. President Biden’s Inflation Reduction Act (IRA) tried to artificially lower costs by putting bureaucrats in charge of setting drug prices. To no one’s surprise, socialist-style price controls only made the problem worse. Americans deserve affordable medicine, not a government one-size-fits-all solution.

Congress should roll back the IRA's prescription drug provisions and replace government price-setting with reforms that encourage competition, protect medical innovation, and give patients more affordable choices.

Under the Biden admin’s IRA Medicare Drug Price Negotiation Program, the federal government determines what it is willing to pay for certain prescription medications, and manufacturers that refuse to participate face potentially severe financial penalties. That’s not free market negotiation, that’s intimidation and forced compliance. Real negotiations occur when both sides have the freedom to negotiate. Under the current system, Washington controls the process and threatens steep penalties for manufacturers that refuse its terms. It is blatant government price-setting disguised as negotiation.

Tennesseans understand that government intervention almost always comes at a cost. As a country, we’ve long led the world in developing innovative medicines because our system rewards investment, competition, and scientific breakthroughs. But developing a new treatment takes years of research, enormous financial resources, and countless experiments before a single medicine reaches the market—oftentimes requiring billions of dollars in investment to bring an innovative drug to market.

When Washington artificially limits the financial return on investments, drug manufacturers, researchers, and investors bristle. We live in a free market economy. Why would companies bother going through years of trial and investment just to take a net loss in the end? The answer is, they won’t. That’s not speculation—the Congressional Budget Office examined the IRA's drug-pricing policies and their economic effects. Its analysis of the law's impact on innovation projected that approximately 13 fewer drugs could reach the market over the next three decades. For Tennessee families waiting on a breakthrough treatment for cancer, Alzheimer's disease, or a rare illness, the possibility that 13 fewer drugs hit the market is crushing - the next cure now might not ever be developed thanks to the misguided top-down government program known as the Inflation Reduction Act.

We have to call out the grim reality of this situation: the IRA is limiting the number of drugs that will hit the market and thousands of Americans will miss out on life-saving opportunities. Washington cannot dismiss those consequences out-of-hand. On an economic level, government price-setting will discourage competition by making certain drug markets less attractive to manufacturers, including companies developing lower-cost alternatives. It doesn’t take an economist to know that limiting the development of new medicines weakens incentives for competition and consumers will be the ones to pay the price.

Artificially lowering costs for a handful of medications today is not the answer to long-term success. Yes—some Americans are paying lower costs for selected medications today because of the IRA. But what about tomorrow? What about in 10 years? If the IRA artificially controls the prices of drugs today, Americans will miss out on the next cure of tomorrow. These policies discourage investment, limit future treatment options, and undermine competition—the guaranteed method to keep prices down. The key to lowering prices over the long-term is allowing companies to compete.

Tennesseans understand that the government cannot mandate its way into health and affordability. Washington must be stripped of control over the pharmaceutical marketplace so the pharmaceutical market can thrive and patients can have greater access to affordable medications. Congress should roll back the IRA's government drug-price-setting provisions and pursue meaningful free-market reforms. That starts by increasing transparency throughout the prescription drug supply chain, holding pharmacy benefit managers accountable, and reducing unnecessary barriers to competition. It also means holding insurance companies responsible for denying patients access to care and putting up its own hurdles of prescription drug access after getting billions and billions of dollars in taxpayer subsidies through Obamacare.

There are targeted protections that help seniors afford essential medications that Congress can maintain without sweeping federal price-controls. Tennessee's congressional delegation must lead the charge to reverse the Biden administration's reckless prescription drug policies and advance reforms that put patients first. The goal should be simple: lower prescription drug costs without sacrificing the medical breakthroughs Americans will depend on tomorrow.

Washington cannot regulate its way to medical innovation, and government price-setting is not a substitute for genuine competition. It's time for Congress to roll back the IRA's prescription drug provisions and let competition, innovation, and patient choice drive down costs.

Patsy Writesman is the owner of ManageHealthCareCosts.com.