The ink is barely dry on the Inflation Reduction Act’s drug pricing provisions. The Centers for Medicare & Medicaid Services hasn’t even finalized many of the relevant regulations.
Yet already, Democrats are whining that their law doesn’t go far enough — so they’re doubling down on the law’s drug price controls. Senators Amy Klobuchar of Minnesota, Peter Welch of Vermont and 23 of their colleagues have introduced the Orwellian-named “Strengthening Medicare and Reducing Taxpayer (SMART) Prices Act,” which they claim “builds on Klobuchar and Welch’s provision included in the Inflation Reduction Act that empowered Medicare to negotiate prescription drug prices for the first time, unleashing the power of Medicare’s 50 million seniors to help lower drug prices for all Americans.”
That’s quite an extraordinary statement, considering that of the 65 million Medicare beneficiaries, only 5.6 million will benefit from lower drug prices under the IRA, according to a new study from consulting firm IQVIA.
But with that kind of hyperbole, why stop there? The Klobuchar/Welch bill should be called the Sledding to Disaster Act. It’s a headlong dive down the slippery slope of federal control of healthcare.
The act calls for a litany of statist policies. It would allow the government to create a national “formulary” of covered medications, thus allowing bureaucrats to decide what medicines are available to tens of millions of Americans. Hello Uncle Sam, MD.
It would also increase the number of drugs subject to price controls to 20 medicines in 2026 (vs. the IRA’s current 10) and 40 drugs in 2027 (vs. 15 under the IRA). And it would make injectable drugs covered by Medicare Part B eligible for price controls starting in 2027 rather than 2028 under current law.
Price controls equal choice controls.
The act would also shorten exclusivity periods for new drugs and make the IRA’s price controls even more stringent by increasing the mandatory discount that Medicare must receive relative to the prices paid by commercial insurers. Lawmakers claim these changes are necessary to target “extended monopoly drugs” and “long monopoly drugs.”
Note the nomenclature change. Rather than calling these healthcare technologies what they are — innovative and lifesaving, the bill’s authors view them as “monopolies.” Do not pass go. Next stop: patent expropriation!
In the pre-pandemic days of 2019, the House of Representatives made the “Lower Costs Now Act” its legislative priority. It was a cruel joke on the American healthcare ecosystem, calling for price controls via an international pricing index.
Common sense prevailed, and the legislation was relegated to the ash heap of history. Today, before we can even fully understand the consequences (intended and unintended) of the Inflation Reduction Act, some members of Congress — this time in the Senate — are ready to take what they consider a Great Leap Forward in American healthcare reform. It is ill-considered and dangerous. Sleazy politics rather than thoughtful policy.
To put it bluntly, the “SMART Prices Act,” isn’t so smart — or is it something that will appeal to certain senators who feel the Biden team played them into supporting the Inflation Reduction Act. Almost heaven, West Virginia? Hardly.
If senators Klobuchar and Welch are going to try to snow the American people, they’re going to need a bigger sled.