The Competitive Enterprise Institute (CEI) and a coalition 43 conservative and free market groups sent a letter to Congress today calling for the repeal of the drug price control provisions of the Inflation Reduction Act.
Key takeaways from the letter include:
- Legislators focused on drugs’ list prices. But the actual net prices after all discounts and rebates have been relatively stable, and prescription drug inflation has been much lower than general inflation.
- The IRA instructs the HHS secretary to select negotiation-eligible drugs based on which drugs and biologics had the highest share of spending through Medicare Part B and Medicare Part D the previous year. Because a particular drug’s high Medicare spending may be based on a drug’s popularity, a drug may be subject to price controls solely for being effective and widely used even if it is priced reasonably.
- Under the IRA, manufacturers have no legal recourse to dispute which drugs are selected and what prices are set. They are effectively told to sell at the price set by HHS or not sell at all. This opens the door to arbitrary administrative actions and creates due process concerns.
- Time and time again, price controls have been shown to suppress innovation by distorting and interfering with supply and demand and other forces that make markets and capitalism work. Price controls on drugs lead to shortages in the short term and fewer innovative new drugs becoming available in the longer term. Fewer life-saving drugs forces higher expenditures on other forms of medical care and decreases overall health.