Government Prescription Drug Price Setting – Still a Bad Idea

I’m back after our 4^th of July break. I hope everyone had a safe and enjoyable holiday. My plan was to have a light, feel good blog on enjoying a summer without the stringent COVID restrictions, but it wasn’t to be. The threat of the government setting the prices on prescription drugs has reared its ugly head again.

As the Senate’s Democrats frantically search for some way to rescue some of the Build Back Better bill that failed on the launching pad, they have released language concerning the control of drug prices that reportedly all Senate Democrats support.

I’ve pontificated ad nauseam about the problems with proposals for the government to control drug prices. I’ve talked about the impact their solutions would have on innovation and how the insertion of government controls would limit access. There are two other aspects of their proposed solution that I haven’t discussed too much that I think need to be highlighted.

First, this proposal is another attempt at finding a politically convenient solution to a complicated problem. H. L. Mencken said, “For every complex problem there is an answer that is clear, simple, and wrong,” and it absolutely applies in this case. The problem is not just proposing a “simple” answer to a complex problem but with politicians turning away from even understanding the complexities of the problem and only searching for a solution that polls well with constituents. That’s why they favor inserting the popular term “negotiations” into the solution’s description when the true process will give the government the ability to arbitrarily impose a non-negotiable take-it-or-leave-it drug price.

The current prescription drug pricing and supply chain is convoluted and costly. It is fraught with perverted incentives and controls that do nothing to lower the out-of-pocket costs for the patient and can even raise the list price of the drug. Seeking to dictate the cost of drugs after they have gone through this inefficient and flawed process is like continuing to manufacture a car with very uncomfortable front seats and then giving everyone who buys the car padded seat cushions for the back seats . . . it doesn’t fix the basic manufacturing problem and the proposed fix shows a lack of understanding of the current problem.

The drug manufacturers continually offer to sit down and talk about drug prices. To my knowledge it hasn’t happened. We need to somehow decide to get to the root of the problem and fix the process rather than continue to propose band aid solutions that further complicate the situation.

The second part of this issue that I feel needs to be discussed is the motivation behind proposing this price fixing proposal. The indications are that the bill will not only contain the drug price control scheme but will also contain programs and costs dealing with climate change, energy production and taxes, and the Democrats are counting on the “projected” savings from drug price-setting to pay for these other programs. To quote the non-partisan Kaiser Family Foundation,

“At the very least, advancing the drug bill would make some other Democratic goals easier to achieve, since it would save the federal government a lot of money, which could then be applied to other programs.”

That’s what bothers me – a lot! Why do our elected politicians think it’s ok to use the hard-earned money we sent to the government to pay for other programs. We were told our money was put into a trust fund that was to be used to pay for our healthcare when we got old. They didn’t say that they were going to use the money to finance other programs, like climate change, energy production, lower taxes or any other current or future whim Washington may come up with. It seems to me this type of action removes any trust we had in the fund and the government that over sees it.

There were some good changes that were implemented in Obamacare. One of the problems I had back when it was being debated was using cuts and savings in Medicare to pay for some of those changes. It wasn’t right then and it’s not right now. If there are savings that can be realized, without reducing healthcare choices and access, then those savings ought to be used to lower the patient’s out-of-pocket costs or shore up Medicare’s financials. We hear continually about when Medicare will run out of money, yet we are willing to use projected Medicare savings for other programs. Even if the proposed changes to Medicare would generate savings without reducing access, benefits, and innovation to find new cures (and you know that I don’t think that’s possible), the savings should be used to the benefit of the Medicare beneficiaries, not other programs. Medicare shouldn’t be used as Washington’s uncontrolled ATM.

Washington needs to understand what’s causing the problem and get all the stakeholders together and decide how to fix the problem rather than continuing to come up with politically expedient band aid solutions. They also need to quit using Medicare to finance this month’s popular issue. We need to tell our leaders in Washington we deserve accessible, quality, innovative healthcare.

Best, Thair