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A Misguided Move on Drug-Price Caps

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Director at Public Health and American Well-Being Initiative
Joel M. Zinberg, M.D., J.D. is the Director of the Public Health and American Well-Being Initiative at Paragon Health Institute, and a senior fellow with the Competitive Enterprise Institute. A native New Yorker, he recently completed two years as General Counsel and Senior Economist at the Council of Economic Advisers in the Executive Office of the President.

Senator Joe Manchin has reportedly told Democrat leaders he will not support the economic package they are seeking to pass through reconciliation, which requires only a simple majority in the Senate. But Manchin has indicated he will support a bill that imposes price controls on Medicare drugs.

Say it ain’t so, Joe. The proposal is unnecessary, and it will harm Americans by decreasing access to innovative new drugs and decreasing life expectancy.

This is the third iteration of recent Democratic efforts to dictate drug prices in the Medicare program. While the three versions differ in small specifics, they all purport to lower drug prices by allowing the secretary of Health and Human Services to directly “negotiate” with drugmakers. All would revoke the provision in the original Medicare Part D prescription drug statute prohibiting the HHS secretary from interfering in negotiations between private Part D plan sponsors and drugmakers and allow controls on prices for Medicare drugs. The bill also limits annual drug-price increases to the rate of inflation and imposes severe monetary penalties for exceeding allowed prices.

This is negotiation, Godfather-style. The drugmaker gets to counter-offer, but ultimately, the HHS secretary makes a price offer that manufacturers can’t refuse.

The full article can be found in National Review.

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