Nancy Pelosi to lower drug prices with more government?
Nancy Pelosi announced her "plan to lower drug prices" with much fanfare this week.
It reprises, yet again, the Democrats' go-to "solution" to every problem – more government control and more penalties on private industry.
In rolling out their latest advance of government power, advocates employed those reliable standbys favored by politicians everywhere: dishonest spin and language that obscures rather than reveals the truth.
The Pelosi plan prefers strong-arming rather than incentives to achieve its purported goal of lowering drug prices for consumers.
A closer examination of the proposal reveals its real goal is government control of private industry. Whether that actually results in lower prices for lifesaving drugs is secondary at best.
The dishonesty begins right at the headline that touts "H.R. 3 – Drug Price Negotiation Bill."
The details show this a negotiation only in the sense that a stickup man "negotiates" with victims who have a gun pointed at their head.
Under the Pelosi plan, the government will be "empowered" (that's scary enough right there) to name the price it wants to pay for a medicine.
The drug company is free to accept the price or refuse – and pay fines as high as 95% of gross annual sales of the drug.
Talk about making an offer you can't refuse!
The government won't simply be negotiating a volume discount as it buys for its Medicare and Medicaid programs. That might actually make some sense by the logic of market economics.
No, drug companies would have to offer the price the government sets in its "negotiations" to all private insurance plans as well.
So we see this is not an honest negotiation, nor an honest attempt by a big buyer to get a volume discount – it is nothing more or less than the government setting prices for the pharmaceutical industry.
The justifications the Democrats use for their incursion into private industry are equally dishonest.
The alarmists tell us "more than 3,400 drugs increased their list prices" in 2019. Wow – 3,400 drugs!
They don't tell us 3,400 drugs represents a tiny share of the pharmaceutical market.
They tell us the cost of insulin "provides one of the starkest examples of broken drug pricing." They tell us that although insulin was invented in 1922, its price has either tripled between the 1990s and 2014 or nearly doubled between 2012 and 2016. We are led to believe there is nothing special about insulin – it's almost a hundred years old, so why has its price gone up?
They don't tell us insulin is particularly expensive to develop and manufacture. They don't tell us it's a biologic drug, extracted from living organisms, and only three companies make more than 90% of the world's supply.
Most importantly, they don't tell us that the federal government's own regulations are blocking other companies from bringing cheaper insulin to market.
Let that sink in – FDA regulations are a major reason insulin prices are higher than they should be. (Or appear to be, as we'll explain shortly.)
Instead of straightening out FDA regulations, or pursuing an antitrust action or otherwise addressing problems particular to insulin, Democrats are using it as an excuse to attack the entire private pharmaceutical industry.
Government regulations created the problem Democrats want to solve with, yes, more government regulation.
There is also a degree of dishonesty built into "the soaring cost of prescription drugs" claim that's the pretext for this massive expansion of government regulatory power.
When the commissars tell you "more than 3,400 drugs increased their list prices" they don't tell you the list price is more than what manufacturers actually receive!
Pharmaceutical "list prices" are substantially higher than the prices manufacturers receive after negotiations with wholesalers, pharmacies and those middlemen known as pharmacy benefit managers that work for or are owned by health insurance plans.
Democrats point to this make-believe "list price" to claim drug companies are making exorbitant profits on drugs, but insurance companies and pharmacy benefit managers are pocketing the money.
These middlemen negotiate discounts from the drug companies and didn't pass those savings on to consumers. That is, they didn't until President Trump changed the regulations (those things, again!).
Pharmacists were also barred from telling you about cheaper alternative drugs because of their contracts with pharmacy benefit managers. The Trump administration eliminated that gag rule as well.
We see a tale of two treatments: President Trump is driving down drug prices by clearing out counterproductive federal regulations, allowing more competition and fostering greater transparency in the prescription drug market.
Nancy Pelosi says she will lower drug prices, but what she's really up to is expanding Washington's power even though it means killing the goose that lays the lifesaving golden eggs.