The Drug Pricing ‘Slippery Slope’

Vermont Rep. Peter Welch


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Kristopher Radder/Associated Press

Progressives are disappointed by the tentative drug price deal Senate Majority Leader Chuck Schumer appears to have struck with West Virginia’s Joe Manchin. But don’t worry, says Vermont Rep. Peter Welch, the price controls are just the beginning of what will be a long raid on drugmakers to fund Democrats’ spending ambitions.

The Senate drug deal would require the Secretary of Health and Human Services to “negotiate” prices on 10 of the top-spending drugs in Medicare starting next year and 20 by the end of the decade. If drug manufacturers don’t accept the price offered by the government, they would be hit with a 95% excise tax on their sales. Take his offer or else.

For now, these sham negotiations would be limited to small molecule drugs that have been approved by the Food and Drug Administration for at least nine years and biologics that have been on the market for 13 years. An analysis by the Kaiser Family Foundation notes that the price controls would still apply to most of Medicare’s top-spending drugs.

But progressives get angry – when are they ever happy? – that the deal does not give the secretary blank power of attorney Power to impose price controls on all medicines. This would be tantamount to dropping a nuclear bomb on the US pharmaceutical industry, causing immediate and widespread collateral damage.

Now Mr. Welch is trying to console his fellow progressives who have failed to get moderate Senate Democrats to blow up the industry all at once. “Don’t underestimate the power of the slippery slope. This is exactly what the pharmaceutical industry is fighting so hard for. They know price negotiations are the beginning, not the end,” he told StatNews.

As for politics, Mr. Welch is certainly right. Once the negotiation process is established, it will be much easier for Democrats to expand the list of covered drugs to meet their next spending target. This time, Democrats plan to use the roughly $200 billion in drug savings to extend sweetened Affordable Care Act (ACA) subsidies by three years and cap the Medicare Part D deductible at $2,000.

But there will always be other spending ambitions, and Pharma will be a ready bank to tap into. Three years from now, Democrats will no doubt be expecting drugmakers to pay for another extension of ACA subsidies, and who knows what else. The incline, once established, will become increasingly slippery, and American drug innovation will be all the poorer for it.

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Appeared in the print edition July 28, 2022 as “The Drug Price ‘Slippery Slope’.”

https://www.wsj.com/articles/the-drug-price-slippery-slope-peter-welch-joe-manchin-chuck-schumer-price-controls-big-pharma-democrats-11658959466 The Drug Pricing ‘Slippery Slope’

Alley Einstein

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