In this era of increased harassment and persecution of people on the basis of political viewpoints and…
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First Amendment Rights: Good News from the IRS on Donor Privacy

In this era of increased harassment and persecution of people on the basis of political viewpoints and First Amendment expression, there’s actually good news to report.

In fact, that positive development comes from none other than the Internal Revenue Service (IRS), which few people typically consider a font of good news.

Specifically, the IRS just announced a proposed rule to stop requiring nonprofit organizations to file what’s known as a Form 990 Schedule B, which exposes sensitive donor information not only to the federal government and potential rogues like former IRS official Lois Lerner, but also people who seek to access and use that information to target people on the basis of political belief.

As we at CFIF have long asserted, this welcome move will help protect the…[more]

September 12, 2019 • 11:07 am

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CFIF to HHS: Don't Blow It With Drug Price Controls Print
By Timothy H. Lee
Thursday, January 03 2019
In other words, instead of exporting our more effective free market policies to other nations to improve their systems, we'd begin importing their price controls and degrade our system.

A relatively stable and sound economy has become the new normal, something too many of us are starting to take for granted.

But just two years ago, things weren't quite so rosy.  As one trip back down Memory Lane, note this Wall Street Journal observation in a September 13, 2016 article entitled "CEOs See Sluggish Growth": 

The business leaders expect a slight deceleration in hiring, with 27% saying their firms plan to add to U.S. payrolls in the next six months, compared with 29% in the second-quarter survey.  The share planning to reduce employment rose by a percentage point, to 36%...  "This reflects the unfortunate new normal," Caterpillar Inc. CEO Doug Oberhelman said.  "The U.S. economy is pretty much stuck in neutral." 

"Stuck in neutral."  That was two months before the 2016 election, when most people presumed that Hillary Clinton would be our next president and continue the preceding eight years of Obama Administration policies.  More companies expected to reduce payrolls than to increase them. 

Fast-forward to this week, when the Journal featured a commentary by former Senator Phil Gramm and Professor Thomas Saving noting in its introductory sentence that, "The Trump economic revival doubled economic-growth rates over the last two years."  Unemployment has fallen to lows not seen since before the moon landing and Woodstock, inflation remains low and business leaders complain that there simply aren't enough applicants to fill their openings.  In fact, the number of job openings now exceeds the number of unemployed Americans for the first time in history. 

Turns out that the "new normal" wasn't so normal after all.  All we needed was a president who elevated deregulation over more regulation, lower taxes over higher taxes and freedom over centralized federal control. 

Like a cruise ship navigating iceberg-filled waters, however, we're always just one wrong turn from potential debacle. 

That's particularly true in a sector like healthcare, which accounts for nearly one-fifth of the U.S. economy. 

Unfortunately, the Department of Health and Human Services (HHS) is preparing to introduce one of the most destructive and discredited ideas in the realm of economics:  price controls. 

Specifically, HHS's Centers for Medicare and Medicaid Services (CMS) contemplates a price control regime known as "International Reference Pricing" for pharmaceuticals covered by the Medicare Part B program.  In plain English, that means the government would artificially impose drug price controls based upon an index reflecting an average of what other nations pay for drugs developed here in America. 

In other words, instead of exporting our more effective free market policies to other nations to improve their systems, we'd begin importing their price controls and degrade our system. 
Why does that matter? 

First of all, price controls never work.  Among the ironclad rules of economics, that remains one of the most irrefutable.  Whether in the form of depressingly long lines of automobiles attempting to buy gasoline during the 1970s in the United States, or contemporary Venezuelan grocery store shelves emptied of even basic staples like toilet paper, price controls result only in shortages and dysfunction. 

Second, price controls would jeopardize America's world-leading pharmaceutical industry. 

If there's an industry that best illustrates the concept of American Exceptionalism, pharmaceuticals may be it.  We account for an astounding two-thirds of all new drugs introduced in the world, even though we're just 5% of the world's population and approximately 24% of its economy. 

That reflects America's atmosphere of relative freedom to innovate, and our absence of drug price controls compared to other developed nations that don't develop pharmaceuticals in the way we do.  According to the U.S. Commerce Department, price controls reduce research and development (R&D) investment each year by between 11% to 16% (or $5 billion and $8 billion) worldwide.   To put that number in perspective, current HHS Secretary Alex Azar observed in 2005 that every $1 billion to $2 billion in lost R&D translates to one fewer new pharmaceutical per year. 

And the reason for that reduction is obvious.  The painstaking process of developing new lifesaving and life-improving drugs requires immense amounts of time, dollars and risk.  Approximately ten years and $2.6 billion on average through Food and Drug Administration (FDA) approval, in fact.  That's precisely why the Trump Administration's Council of Economic Advisors warned earlier this year that slashing reimbursement for medicines "makes better health costlier in the future by curtailing innovation." 

Worldwide experience confirms that warning.  To wit, Americans enjoy access to 70 of 74 new cancer drugs developed between 2011 and 2018, whereas British cancer patients can only access 74% of those new medicines, Japanese only 49% and Greeks just 8%.  That helps explain why the U.S. outpaces other industrialized nations in terms of cancer survival rates, based on access to those drugs. 

Even the United Nations World Health Organization (WHO) acknowledges that cause/effect relationship: 

Every time one country demands a lower price, it leads to a lower price reference used by other countries.  Such price controls, combined with the threat of market lockout or intellectual property infringement, prevent drug companies from charging market rates for their products, while delaying the availability of new cures to patients living in countries implementing those policies. 

Unfortunately, the WHO demonstrates a more reality-based understanding of the destructive nature of drug price controls than our own HHS. 

The Trump Administration, which as noted above has demonstrated exceptional economic stewardship over the past two years, can correct course.  We can't afford to gamble with one-fifth of the U.S. economy and the health and well-being of so many Americans who benefit from new drugs each year. 

We at CFIF recently filed an official Comment with the CMS urging it to recognize the futility of this contemplated drug price control regime, and hopefully wiser heads prevail. 

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