Joe Biden’s prescription for disaster

It isn’t often a presidential administration does something wildly destructive and seemingly out of spite. Yet that appears to be what Joe Biden’s administration is doing with prescription drugs as it seeks to force price controls on pharmaceutical companies and a punitive excise tax on any that resist.

“Better access to drugs, especially in poor countries, could save 10 million lives each year, four million of them in Africa and Southeast Asia,” the United Nations estimated in 2007. Unmentioned in that assessment is how government policies hinder access to lifesaving drugs.

We fund the billions in research and development to produce new drugs. We empower innovation. Or we used to, anyway.

Governments in countries with “low” prescription drug costs impose those costs on the companies in several ways. First, they simply drag their feet on the drug approval process. A 2019 study in the Journal of the American Medical Association looked at the “difference in the availability of new drugs in Germany and the U.S.” and found that “compared with the U.S., fewer new medicines are available in Germany, and they enter the market at a later time.”

JAMA reported the “study comparing 599 medicine approvals in the U.S. and Germany between 2004 and 2018," and "92% of all new medicines approved in either country were available in the U.S., and 80% were available in Germany. The median approval time in Germany was extended by 4 months.”

In short, more drugs were available to Americans, and they were available sooner than in Germany.

Germany is not unique. Governments in countries with socialized medicine schemes hinder new drugs entering their markets while the government “negotiates” the price they will pay. This process adds significant time to the approval process.

While four months may not seem like a lot of time, it can be a lifetime for people afflicted with something for which the new or latest, most effective treatment is held up by bureaucrats as they set the price. It’s hardly a “negotiation” at all. Governments typically issue an ultimatum: Accept the price we’re demanding, or we’ll seize (i.e., steal) your patent and have a domestic company make the drug.

The Biden administration now claims that it, too, has the power to seize drug patents when companies that own them refuse to give in to the government’s price demands.

When other countries force lower prices than the market would otherwise produce, the ensuing shortfall needs to be made up somewhere else. That somewhere else is usually the United States.

We fund the billions in research and development to produce new drugs. We are the world’s leading innovators. It’s not an accident that the United States dominates the pharmaceutical market: We empower innovation.

Or we used to, anyway.

In addition to the ability to seize patents, the Biden administration also asserts the power to impose a 95% excise tax on any company that does not “negotiate” with Medicare to the satisfaction of the president.

As part of the “Inflation Reduction Act,” the president has the ability, for the first time ever, to negotiate the cost of a limited number of prescription drugs on behalf of the government. Should the government be unsatisfied with the drug company and not be able to come to terms, or the company simply refuses to accept what the federal government dictates, the administration can impose that 95% excise tax.

Call it anything you like — coercion, extortion, theft — but don’t call it “negotiation.”

For now, the administration’s power to “negotiate” drug prices is limited. But unless and until Congress steps in, the power will expand. It is the pathway to crippling the prescription drug market in the United States.

This should scare the heck out of anyone with a loved one who needs prescription drugs to treat a chronic illness or is fighting any condition for which surgery is not an option. It will kill innovation and, ultimately, do the same to Americans who depend on medications to survive and thrive.