Freedom Line Blog

In order to lower healthcare costs for all Americans, a pivotal and necessary realm to address remains health insurance.

It’s therefore appropriate that the United States House of Representatives Committees on Ways & Means and Energy and Commerce will hold a timely hearing this week with executives representing major U.S. insurance companies.

Currently, the health insurance industry remains highly concentrated while American consumers continue to pay higher and higher healthcare costs.  At a deeper level, Pharmacy Benefit Managers (PBMs) amount to middlemen that control prescription drugs for millions of Americans.  A majority of Americans receive health insurance through employer plans or government programs such as Medicare, which in turn cover prescription drugs through PBMs.  Those PBMs negotiate with drug companies and pay pharmacies, but throughout the process determine the drugs that insured patients may obtain and at what cost.

The problem is that PBMs operate in such an opaque and complex manner that they’re able to inflate drug costs while claiming to be working to reduce them.  It has reached a point where even the Federal Trade Commission (FTC) commenced an investigation of PBMs’ role in driving up costs for Americans.

That’s why this week’s hearing with insurance company executives is so important, and offers such a critical opportunity to make real, meaningful progress on the ongoing concern to American consumers.

It’s critical to emphasize that the answer to healthcare affordability doesn’t lie in counterproductive drug price controls or violating critical patent protections for pharmaceutical innovators.  That would do nothing to lower healthcare costs, and would instead only make critical lifesaving pharmaceuticals and healthcare innovations less available to Americans.

To improve consumer access and affordability, let’s achieve real reform where it matters – at the health insurance and PBM levels.

In a startling visual, our friends at Unleash Prosperity highlight something that has gone underreported to date:  The degree to which Americans’ average 401(k) plans have grown during both of President Trump’s terms, but fell by $25,000 under Joe Biden in inflation-adjusted terms.  Something to consider when Trump’s opponents attempt to claim that Americans suffer an “affordability” crisis under his leadership:

Your 401(k) Under Trump Versus Biden

As the United States Senate Finance Committee convenes today for a meeting entitled “The Rising Cost of Health Care:  Considering Meaningful Solutions for All Americans,” the enduring adage of medical care applies:  Do no harm.

Specifically, as we’ve detailed at CFIF, we must especially avoid potentially catastrophic ideas like drug price controls (whether through so-called “Most Favored Nation” (MFN) programs or any other) and violations of patent and intellectual property (IP) protections in which the United States leads the world.  Indeed, our more free-market approach explains why America leads the world in lifesaving healthcare innovation, accounting for an astonishing two-thirds of all new drugs introduced to the world each year:

The reasons that MFN schemes would only exacerbate existing problems are several.

First, drug price controls depress innovation in foreign nations such as those in the European Union (EU) that practice them.  That’s because drug innovation requires massive investments in research and development (R&D), often exceeding $2.6 billion to bring each new potential drug to the consumer market.  Consequently, when foreign governments impose artificially low prices, they necessarily strip pharmaceutical innovators of the revenue required to fund new treatments.  As a result, fewer breakthrough therapies arrive, and the slowdown in medical advances can cost lives.

As noted above, that consequence isn’t hypothetical or open to debate.  To wit, the more market-oriented U.S. accounts for an astounding two-thirds of all new drugs introduced to the world, far above our share of the world’s population or economic production.  That’s no accident or coincidence.

Second, and partly as a consequence of the dynamic described immediately above, drug price controls reduce access to lifesaving drugs.  Nations that impose them suffer from delayed drug availability and restricted access, whereas the newest and most effective pharmaceutical innovations typically reach the U.S. market first.

To illustrate, of 270 medicines introduced in the U.S. from 2011 through 2018, only 53% became available in France, 64% in Britain and 67% of them in Germany.  Only 52% of that 270 became available to Canadians, 41% to Australians and 48% to the Japanese.

If the U.S. were to adopt MFN pricing, it would foolishly import those foreign delays and access restrictions, in turn reducing American consumers’ access to cutting-edge treatments.”

Along the way, the Committee should also highlight the perils of continued subsidies for ObamaCare and the potential benefits of other patient-centered reforms like health savings accounts (HSAs) and Section 340B reform.  Healthcare costs remain an important concern for Americans, and we must promote federal policies that improve matters for consumers and patients, not harm them.

From Unleash Prosperity, following our latest Liberty Update commentary referencing the issue, more picture-is-worth-a-thousand-words excellence, highlighting the Mount Everest of Joe Biden’s inflation record versus President Trump’s:

Inflation: Biden Versus Trump, Part II

In our latest Liberty Update, we highlight the welcome series of positive economic news since Donald Trump returned to the White House in January, including his superior record on inflation compared to his predecessor Joe Biden.  As is often the case, our friends at Unleash Prosperity have captured that inflation comparison in a helpful image, which is worth sharing and keeping in mind when the media continues to do its best to badmouth the Trump economy:

Trump Versus Biden On Inflation

Are you better off today than you were four years ago?

If you happen to be someone who ever purchases gasoline, the answer is no on that front, as our friends at the Unleash Prosperity Hotline highlight.  The Biden/Harris administration and its cheerleaders frequently trumpet that inflation and prices for items like gasoline are down significantly from their recent highs, what they rarely bother to tell you is that they’re still up significantly from when Biden and Harris took over:

The Biden/Harris Effect

In their increasingly desperate effort to resuscitate Joe Biden’s sagging campaign, his defenders claim that stock markets vindicate “Bidenomics” (not that they call it that anymore, of course) vis-a-vis former President Donald Trump.  Well, our friends at the Committee to Unleash Prosperity show what happens when you adjust stock performance to account for out-of-control inflation under Biden:

“Biden Boom?” Not So Much.

Joe Biden tells Americans that he’s helping them by building “from the bottom up and the middle out.”  But the numbers don’t lie, and the ugly reality is that he’s only dragging us all toward the bottom.  Throughout his presidency, wage gains (green) have been consistently exceeded by inflation (blue), meaning loss in real earnings (red):

Bidenomics Means Lost Earnings

Consumer spending accounts for approximately two-thirds of the U.S. economy, so Joe Biden’s crushing impact on consumer confidence helps resolve his apologists’ confusion over Biden’s economic disapproval.  After inheriting an economy rebounding from the Covid shock, Biden’s policies quickly drove consumer confidence back downward, where it continues to stagnate.  No wonder he finds himself in such electoral hot water.

Bidenomics Crushes Consumer Confidence

As Joe Biden attempts to paint a rosy picture despite Americans’ real-world experiences, the truth is that wages still haven’t caught up to inflation during his presidency:

Inflation Outpaces Wages Under Biden

Following up on our latest Liberty Update commentary highlighting the deepening disaster that is the Biden Administration healthcare and pharmaceutical policy, The Wall Street Journal notes that prescription drug prices have actually ACCELERATED their price inflation since Biden’s so-called “Inflation Reduction Act”:

Prescription drug prices increased by 2% during the Trump Presidency owing to greater generic competition, yet they’ve increased 5.5% so far under Mr. Biden. In November they rose at an annual rate of nearly 6%. Has the White House considered that the reason Americans don’t believe that the President’s policies have helped them is because they haven’t?”

The Biden Administration needs to correct course for the benefit of Americans, not double down.  But time is running out.

In our latest Liberty Update we highlight how replacing Joe Biden atop the Democrats’ 2024 ticket wouldn’t substantively change the left’s “Bidenomics” economic agenda that is the main voter concern driving his unpopularity.  In noting Biden’s strange and stubborn habit of whispering into the microphone that “It’s working” when promoting that failing agenda, we noted that poverty just surged at a record rate last year, according to the federal government itself.  From our friend Stephen Moore, here’s a helpful visual placing it in stark relief:

Bidenomics Is “Working?”

CFIF recently marked the ignominious one-year anniversary of the Biden Administration’s misnamed “Inflation Reduction Act” (IRA), whose title even Biden himself admitted was mistaken.

We noted how, as a result of the IRA, drug shortages have already reached record highs, increasing by 30% between 2021 and 2022 alone, according to a report in March from the Senate Committee on Homeland Security and Governmental Affairs.  Another report from the American Cancer Society also sounded the alarm on emerging drug shortages, caused in part by drug price control policies.  Thus, just one year in, drug shortages have reached record levels under the looming threat of drug price controls, weaker intellectual property protections and regulatory browbeating.

This week, as reported by Politico, the same Biden Administration that called inflation “transitory” and insists in the face of public blowback that “Bidenomics” is somehow succeeding announced that it will soon release the first ten prescription drugs selected for its destructive price control scheme:

President Joe Biden has sought to sell health policies like the new Medicare negotiation program as part of a broader ‘Bidenomics’ agenda set to underpin his reelection campaign.  The drug pricing push, he has argued, will help counter inflation and boost the economy by slashing the amount Americans have to shell out each year for critical medicines, although prices negotiated on the first set of drugs won’t take effect until 2026.”

Given Biden’s shoddy record for accuracy and competence so far, Americans will be forgiven for their skepticism.  As we noted, the consequence of price controls will be shortages and less innovation, which we’re already witnessing.  Americans aren’t buying this “Bidenomics” pitch, and will pay a heavy price unless and until these dangerous drug price controls are reversed.

Make of this what you will, as Joe Biden pitches “Bidenomics” in his reelection effort and maligns the alleged “trickle down” economic record of his predecessor:

Bidenomics

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

We recently referenced how Joe Biden seeks a 2024 job extension from American voters even while he has presided over a record 24 consecutive months of earnings declines (wages minus inflation), and our friend Stephen Moore offers an instructive illustration of the point:

Record Biden Earnings Bust

While Joe Biden simply repeats his claims to be building an economy “from the bottom up and the middle out,” and strangely brags about slight reductions in the rate of inflation that shot upward under him, our friend Stephen Moore provides yet another handy visual on how inflation has outpaced wage gains since Biden entered the White House:

Joe Biden the Wage Slayer

Continuing our efforts to warn against the perils of federal, state, and local efforts to target short-term lenders while working families face increasing economic headwinds, Stacy Watson came out with a fantastic new commentary entitled “What’s the Fed Doing to Fight ‘She-Flation?”  She highlights the ways in which inflation can hit women particularly hard, and cautions against counterproductive legislation and regulation that will only make access to financing more difficult:

While the federal government is acting to tame inflation through legislation and monetary policy, there is more that can be done to ease the burdens of she-flation. For one, the government should increase access to liquidity for small businesses. That would incentivize and enable women to become entrepreneurs, seize control of their destinies, and, it is hoped, increase earning potential. Encouraging banks to partner with technology companies that serve underbanked consumers would open access to credit for many single moms and entrepreneurial women.   

Lawmakers should also take off the table legislation that would remove access to personal and small business credit, such as the recently reintroduced “Safe Lending Act.” Although the bill purports to protect consumers from deceptive lending practices, what it would actually do is gut access to credit for working-class families, minorities, and women.”

Bravo.

We at CFIF often warn how attempts at “drug price controls” will only succeed in killing lifesaving drug innovation, in which the U.S. leads the world without a close second.

Joe Biden’s so-called “Inflation Reduction Act” constitutes a perfect illustration, and in a Wall Street Journal piece entitled “The Inflation Reduction Act Is Already Killing Potential Cures,” USC Schaeffer Center for Health Policy & Economics fellow Joe Grogan shows how “we’re already getting signs of the damage”:

One poorly crafted provision is driving companies away from research into treating rare diseases.  In its Oct. 27 earnings statement, Alnylam announced it is suspending development of a treatment for Stargardt disease, a rare eye disorder, because of the company’s need ‘to evaluate impact of the Inflation Reduction Act.’  Alnylam’s decision turns on a provision in the Democrats’ bill that exempts from price-setting negotiations drugs that treat only one rare disease.  The company’s drug is currently marketed as treating only amyloidosis, and thus is exempt from Medicare’s price setting.  If Alnylam proceeded with research into treating Stargardt, it would lose its exemption.”

And that’s not even the end of it.  Earlier this week, Eli Lilly announced termination of a blood cancer drug because, “In light of the Inflation Reduction Act, this program no longer met our threshold for continued investment.”

Mr. Grogan proceeds to offer a must-read primer on how and why this is happening, then concludes by admonishing the next Congress convening in January to abandon this instant disaster and promote innovation instead of cheap Biden Administration talking point schemes:

The Democrats may have achieved a short-term talking point for the midterm elections, but in the long term this partisan healthcare bill will prevent patients from receiving innovative, lifesaving treatments.  A new Congress would serve Americans well by replacing the Inflation Reduction Act with an approach that recognizes the need for economic incentives to bring new treatments to patients.”

Good advice.

Joe Biden has leased fewer acres for oil and gas drilling than any other president.  Don’t dare suggest that he bears any responsibility for skyrocketing energy prices during his presidency, though.

Biden Administration’s War on Drilling