Pelosi’s Healthcare Monstrosity Seeks Traction Print
By Timothy H. Lee
Thursday, October 17 2019
Pelosi’s legislation would jeopardize nearly $1 trillion in U.S. pharmaceutical investment, undermine patent protections, suffocate drug innovation and ultimately punish consumers.

As the 2020 presidential campaign accelerates, it increasingly resembles some leftist avant-garde circus of the absurd.  

Apparently, no policy position appears too extreme as the candidates’ jostle for attention and radical chic street cred.  Door-to-door firearms confiscation?  Open borders?  “Free” college?  Slavery reparations?  Green New Deals?  Economically crippling tax increases? 

They’ve quickly gone from radioactive to de rigueur. 

Policies that once constituted caricature are now openly embraced rather than angrily denied.  And the most likely beneficiary is Donald Trump, whose future campaign ads need only replay footage of the candidates engaging in such preposterous rhetoric.  Those bells cannot be un-rung next year. 

It’s therefore understandable that this ongoing vaudeville routine receives a disproportionate share of media and public attention, but the spectacle shouldn’t obscure the very real, substantive efforts underway to impose the same agenda. 

Specifically, House Speaker Nancy Pelosi (D – California) last month introduced H.R. 3, her legislation to upend America’s healthcare sector and impose socialized medicine upon the American public.  This week, with attention focused on the farcical impeachment drama and the Democratic debate, Congressional committees began formal consideration of her bill. 

American voters must understand that Pelosi’s proposal amounts to the most extremist effort undertaken to finally commandeer American healthcare by federal government overlords. 

Pelosi’s bill includes an astonishing 95% tax on total pharmaceutical sales – not on profits, but sales – for private companies that don’t play ball to Pelosi’s satisfaction.  Her proposal would also impose foreign price controls, completely restructure the popular Medicare Part D program, and create a compulsory arbitration mechanism overseen by government bureaucrats. 

In a letter to Congress signed by 70 conservative and libertarian organizations including CFIF, the implications of Pelosi’s draconian tax proposal were made clear: 

This means that a manufacturer selling a medicine for $100 will owe $95 in tax for every product sold with no allowance for the costs incurred.  No deductions would be allowed, and it would be imposed on manufacturers in addition to federal and state income taxes they must pay. 

The alternative to paying this tax is for the companies to submit to strict government price controls on the medicines they produce.  While the Pelosi bill claims this is “negotiation,” the plan is more akin to theft. 

Here’s the danger of price control proposals, which have suddenly become all too common in our ongoing healthcare reform debate, despite the fact that price controls fail every time they’re imposed, regardless of location, and regardless of the product targeted. 

Foreign nations impose price controls by threatening to violate drug patents in order to sell generic copies if the targeted drug companies who own the patents fail to submit.  That constitutes extortion, and means that pharmaceutical innovators must either accept government-dictated prices or have their property simply commandeered. 

The direct consequence of price controls in nations that impose them is dramatically reduced access to new lifesaving and life-improving drugs.  Between 2011 and 2018, for example, consumers in the United States could access 70 of 74 new cancer drugs.  That’s a 95% access rate.  By comparison, only 74% of those new drugs were available to consumers in the United Kingdom, 49% in Japan and merely 8% in Greece. 

That, in turn, affects cancer survival rates.  The availability of new drugs is partly why, according to The Wall Street Journal, “America outpaces 10 European countries on cancer survival rates.” 

Very few potential new drugs ever reach the consumer market, due to astronomical research and development costs, lengthy government safety reviews, laboratory tests of effectiveness, potential product liability lawsuits by plaintiffs’ attorneys, patent protection limitations and other bureaucratic demands.  Artificial price controls make it more difficult to recover the costs of new medicines and R & D, so fewer potential new drugs are pursued due to cost ineffectiveness. 

To its credit, even the United Nations World Health Organization recognized how price controls prevent new drugs from coming to market, in turn harming consumers: 

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. 

But that’s precisely what Pelosi’s legislation would do. 

America accounts for nearly two-thirds of all new pharmaceuticals introduced worldwide, precisely because of our more market-oriented pharmaceutical industry.  Instead of importing other nations’ price control schemes and suffering the consequences, we should be exporting our system to their shores. 

Pelosi’s legislation would jeopardize nearly $1 trillion in U.S. pharmaceutical investment, undermine patent protections, suffocate drug innovation and ultimately punish consumers.  That’s far too high a price to pay, and responsible members of Congress must therefore stop Pelosi’s bill in its tracks.