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Op-Ed: Price controls are back-door
funding scheme at the expense of taxpayers, seniors
[The Center Square]
David Williams
Even as America
emerges from the devastation of the COVID-19 pandemic, health care
remains a hot-button issue on Capitol Hill and across the country.
Although lawmakers widely agree that patients deserve better access to
care and lower health care costs across the board, they continue to push
failed policy proposals from the past that would have the opposite
effect. |
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 Lawmakers are once again pushing for a harmful proposal that
would institute price controls to the health care system, giving federal
officials broad discretion to jeopardize access to lifesaving medications.
The resurfaced proposal would allow the federal government to tell the private
sector what price it must accept for certain drugs under Medicare. Thankfully,
these harmful measures have been explicitly excluded from previous legislation
or have (to-date) failed to be passed into law. This is mainly because such
anti-free market behavior would crush the American innovation Americans depend
on, leaving patients more vulnerable than ever.
Back in 2003, Medicare Part D was passed into law as an
optional program to help Medicare beneficiaries pay for prescription drugs.
Under the program, drug benefits are provided by private insurance plans that
receive premiums from both enrollees and the government. Seniors have expressed
widespread support of the program, which bolsters competition and drives prices
down. Despite this, some lawmakers want to increase government involvement by
repealing the program’s non-interference (NI) clause and allowing bureaucrats to
set drug prices.
This would be a recipe for disaster.
The NI clause was established to prohibit the Secretary of Health and Human
Services (HHS) from interfering in private price negotiations between Medicare
Part D plans, drug manufacturers, and pharmacies in the program. NI also
prohibits the HHS Secretary from requiring a national formulary – the list of
drugs that Medicare will cover. Despite Medicare Part D’s proven success in
keeping premiums low and protecting access to needed medications for seniors,
lawmakers see intervention as a money-making tactic.
The effort to repeal NI is a back-door opportunity for the federal government to
temporarily offset costs of unrelated spending measures by reducing federal
support for the care seniors need. Further, not only do most Americans oppose
these types of changes to Medicare, but lawmakers within their own parties can
barely agree on legislation like H.R. 3, which also includes deceptive
government “negotiation” measures. These harmful proposals would have
devastating impacts on patients and taxpayers.
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Giving the federal government opportunities to
interfere in drug price negotiations is a direct assault on the
private sector innovation that brought Americans the COVID-19
vaccine in record time. Upending the Medicare Part D model will
ultimately skew market forces and disincentivize the private sector,
limiting future access to treatment options – pandemic or not.
Policymakers curious to see the impact of these policies only need
examine Europe’s tragic decline in healthcare innovation over the
past few decades. Before European nations resorted to price-fixing,
the continent was a global center for drug innovation and research
for new cures. But after an abrupt shift in policy toward more
government intervention, the proportion of new drugs created in
nations such as France, Germany, and the U.K. has plummeted from 45
percent to 20 percent. Manufacturers ditched the rigid price
controls and set up shop in America. But if America introduces price
controls of their own, history may well repeat itself.
The Congressional Budget Office recognizes this sober reality, and
wrote a letter to House Committee on Energy and Commerce Chairman
Frank Pallone confirming that government interference through
price-setting would lead to significantly fewer new cures for
patients.
Lawmakers supporting the repeal of the non-interference clause and
imposition of price controls on medicines for seniors risk
jeopardizing the already robust and competitive Medicare Part D
system. The long-term effects of these efforts will cripple our
healthcare system, moving it ever closer to failed systems abroad
and subsidizing poorer health outcomes on the taxpayer’s dime.
COVID-19 has taught the country a few things about what works when
it comes to effective healthcare policy. If lawmakers are sincere in
their efforts to help patients, then regulatory flexibility and
private sector innovation are key to success. Price controls will
only result in failure and misery.
David Williams is the president of the Taxpayers Protection
Alliance.
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