Archive for June, 2023
June 29th, 2023 at 12:06 pm
New Study Confirms Deadly Effect of Drug Price Controls on Lifesaving Innovation
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For years we’ve warned how drug price controls – as with price controls on any product or service – don’t reduce prices so much as they inevitably cause shortages and stifle innovation.

Europe and other advanced economies imposing socialized drug price controls suffer dramatic shortages compared to the traditionally more market-oriented United States, and now in the wake of the misnamed “Inflation Reduction Act” (IRA), the U.S. is already experiencing unprecedented drug shortages.

This is literally a matter of life and death.

A new analysis from Vital Transformation offers the latest detail on how the IRA’s drug price controls, and the proposed “Smart Prices Act” (SPA) seeking to expand them, will stifle innovation in the field of lifesaving pharmaceuticals:

Looking forward, we estimate that the expanded government price setting could result in roughly 230 fewer FDA approvals of new medicines over a ten-year period, once the impacts are fully reflected in the pipeline.  Impacts will be felt most heavily in many areas of unmet need, including rare disease, oncology, neurology, and infectious disease.”  (Emphasis added.)

Indeed, Vital Transformation’s study illustrates how many of the drugs currently targeted by the IRA’s price controls would’ve never come to market had the price controls existed at the time:

Had the drug pricing provisions of the SPA been in place prior to the development of today’s top-selling medicines, we estimate that 82 of the 121 therapies we identified as selected for price setting would likely have not been developed.”

In addition to price controls’ impact on lifesaving drug innovation, the new study also helpfully highlights the negative economic and job effects of these price controls on the U.S. economy and employment market:

We modeled the impacts on industry revenues and future R&D investments and estimated future lost innovation impacts including the impact on industry jobs.  We estimate a loss of between 146,000 – 230,000 direct biopharmaceutical industry jobs and a total of 730,000 – 1,100,000 U.S. jobs across the economy if the proposed IRA expansion were to be implemented.”

All of this, of course, simply confirms what analysts have known for decades.  A 2021 University of Chicago study warned in equally stark terms how drug price controls will dangerously reduce drug innovation and availability:

The United States has far fewer restrictions on price controls than other countries, but the Biden Administration has announced their goal to lower drug prices through greater price regulation.  …  [N]ew drug approvals will fall by 32 to 65 approvals from 2021 to 2029 and 135 to 277 approvals from 2030 to 2039.  These significant drops in new drug approvals will lead to delays in needed drug therapies, resulting in worse health outcomes for patients.”

Believe it or not, even the United Nations World Health Organization (WHO) issued the same warning of the deadly consequences of government price controls and weaker patent protections:

[P]rice 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.”

The evidence and real-world impacts are frankly beyond dispute.  Accordingly, it’s now up to reasonable members of the U.S. Senate and House of Representatives to oppose Joe Biden’s proposed 2024 budget and the SPA and avert the predictable deadly economically destructive consequences.

June 23rd, 2023 at 11:05 am
Image of the Day: The DeSantis/Newsom Debate, Illustrated
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California Governor Gavin Newsom, who faced recall despite his state’s deep-blue status, continues his bizarre campaign to pick fights with Florida Governor Ron DeSantis, and can attempt to spin California’s disastrous social and economic decline any way he’d like.  The numbers, however, don’t lie.  Rhetoric is cheap, but people vote with their dollars and feet.  And in that measure, Newsom’s California suffers alongside his deep-blue brethren, as illustrated by our economist friend Steve Moore using official U.S. Census Bureau data:

DeSantis vs. Newsome in One Picture

DeSantis vs. Newsom in One Picture


June 20th, 2023 at 3:43 pm
What Is the DCA Act and How Would It Improve Air Travel?
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The bipartisan Direct Capital Access (DCA) Act – recently introduced in both the United States House of Representatives and Senate – aims to reform antiquated legislation from 1966 artificially restricting nonstop flights into and out of Ronald Reagan Washington National Airport.

Since the DCA Act (H.R. 3185, S. 1933) was introduced in the House by Congressmen Burgess Owens (R – Utah) and Hank Johnson (D-Georgia) and in the Senate by Senators Cynthia Lummis (R – Wyoming) and Raphael Warnock (D-Georgia), opponents have lobbed false claims about its impact on regional airports.

Accordingly, it’s time to clear up any confusion and provide the corrective facts.

As background, the DCA Act would make travel to and from the Washington, D.C. region easier and more affordable for Americans by updating a decades-old “perimeter rule” federal regulation. That rule from 1966 limits direct flights to and from Reagan National Airport (DCA) to destinations within a 1,250 mile “perimeter.” The rule is a relic of a bygone era of air travel that only kneecaps modern travelers with fewer direct flight options and higher ticket prices.

As the DCA Act has gained support from lawmakers, several self-interested parties like the Metropolitan Washington Airports Authority (MWAA) recently partnered with United Airlines to stop efforts to increase access to the nation’s capital region because the current antiquated restrictions benefit them.

Let’s Set the Record Straight:

MYTH: Groups working with MWAA and United Airlines falsely claim that any changes to the 1966 perimeter rule would harm regional airports and their communities.

FACT: The DCA Act would only add more incoming and outgoing flights, not replace or eliminate any existing flights that currently service regional airports. There are only additional benefits here!

MYTH: Those who oppose more airline competition and lower ticket prices for their own benefit falsely claim that Reagan National Airport currently operates at maximum capacity, and cannot handle increased traffic from additional flights.

FACT: A recent study released by Capital Access Alliance revealed that not only does Reagan National have the capacity to handle many more flights per day, but also that MWAA’s recent Project Journey $1 billion expansion provided passengers at DCA with more post-security space and a new 14-gate concourse. That created more than what is needed to accommodate higher passenger volumes and more direct flights to Reagan National.

MYTH: Another false claim is that the DCA Act must be opposed in order to strengthen and protect regional airports across America.

FACT: Only a handful of members of the Coalition to Protect America’s Airports, the United Airlines/MWAA-supported group attempting to block the DCA Act, maintain direct flights from Reagan National. What they really advocate is keeping a nearly 60-year-old perimeter rule established by Congress to stifle competition and limit choices that Americans can make on air travel resulting in higher costs.

The facts are clear. Those who oppose the DCA Act are endorsing protectionist policies that prevent Americans from enjoying more convenience and affordable choices. It’s time to modernize.

Tell Congress to act and support the DCA Act.

June 16th, 2023 at 1:43 pm
Live Nation Announces “All-In Pricing” Market Solution to Ticket Purchase Experience, but Congress Can Do More
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This week, live entertainment promotion and ticket company Live Nation announced a market solution to address longstanding concerns regarding the consumer ticket purchase experience.  After advocating for “all-in pricing” for some time, the idea will take effect this September:

With all-in pricing, fans can see upfront the full ticket price, including fees.  Fans typically know tickets will include service fees, but seeing the total cost from the start makes buying tickets easier and consistent with other retail shopping experiences.”

While this constitutes a significant step forward and illustrates the marketplace at work, an important role remains for Congress to pass further reforms to protect artists’ ability to determine how tickets to their own performances will be sold and distributed, as well as their fans’ ability to actually see their favorite artists perform.

Specifically, predatory ticket resellers currently engage in practices that harm both the artists and their fans.  For example, resale ticket prices on Stubhub alone have shot up over 100% since just 2019, even though the face value of the tickets they resell have only risen 10%.  Although a patchwork of state laws currently exist, Congress can streamline consumer protections and artist rights by finally passing laws making it illegal for predatory resellers, ticket brokers and ticketing platforms to disregard artists’ and venues’ agreed-upon terms and conditions for performances, which should include restrictions on price-gouging by reselling tickets above face value.  Currently, some practices render everyday fans unable to attend their favorite artists’ performances.

The Better Online Ticket Sales (BOTS) Act, for instance, can be fortified by Congress to guarantee that real, actual fans, rather than bots employed by predatory resellers, get first opportunities to purchase tickets to performances.

This week’s announcement on “all-in pricing” offers a welcome improvement.  Now it’s time for Congress to move the ball further forward.


June 6th, 2023 at 11:45 am
Image of the Day: The Ongoing Biden Pay Cut
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Posted without additional commentary, per the latest Labor Department data, here’s an illustration from economist Steve Moore of the immediate and ongoing pay cut that Americans have experienced since Joe Biden became president:

The Biden Pay Cut

The Biden Pay Cut