The Biden Administration’s assault on pharmaceutical innovation is already triggering dangerous consequences, with more to come in future years.

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An increasingly frustrated Joe Biden insists on declaring Bidenomics a success, despite Americans’ overwhelming recognition of its obvious failure.   

Doubling down on that failure, Biden now aspires to do to pharmaceutical innovation and the healthcare sector what he’s done to the broader economy.  

To mark the first anniversary of the misnamed “Inflation Reduction Act” – it actually increases inflation, but that’s a separate topic – the Biden Administration announced that it had selected the first ten pharmaceuticals it will subject to the IRA’s price control schemes.  The targeted drugs include treatments for cancer, diabetes and heart disease, which obviously impact tens of millions of Americans.  

Adding insult to upcoming injury, the Biden Administration soothingly claims that it’s simply opening the targeted drugs to “negotiation,” but that’s flatly dishonest.  

In a legitimate “negotiation,” independent parties mutually attempt to reach a voluntary agreement through free negotiation, and if either party is dissatisfied with the other party’s offer it can simply walk away and forego the potential benefits of the contractual relationship.  That’s not what will happen under Biden’s scheme.  Instead, the Biden Administration would set a price ceiling far below the targeted drugs’ list prices.  If the pharmaceutical manufacturer ultimately finds the government’s best and final offer unworkable, it can’t simply walk away and sell its products in peace in the private marketplace.  Rather, it will be hit with tax penalties amounting to at least 186% of revenues, potentially reaching 1,900%.  

That’s not “negotiation,” its bureaucratic thuggery.   

That outrageous bureaucratic coercion, however, isn’t the worst aspect of Biden’s price control scheme.  What’s far more troubling is the cost in lost lives and worse medical outcomes that the law will inflict upon American consumers.  

In fact, those costs are already being felt.  

The leading authority on the interplay between government price controls and reduced access to lifesaving drugs comes from the University of Chicago, which found that the Biden Administration’s price controls would delay new drug development by 7 years, mean 135 fewer new drugs between now and 2039, and lead to an astonishing 331.5 million life years lost, which is 31 times higher than the 10.7 million total life years lost due to Covid at the time of the study’s publication.  That’s not a misprint:  

We find reduced revenues of 12.0 percent for pharmaceutical companies through 2039.  Using the evidence base above on the impact of revenue on R&D we find R&D spending will be about 18.5 percent lower, or $663 billion, through 2039.  This equates to new drug therapies being delayed up to 7 years due to less R&D spending leading to 135 fewer new drug approvals through 2039.  The declines in new drug approvals could potentially lead to 331.5 million life years lost through 2039.  For comparison, this is 31 times higher than the life years lost due to COVID-19 to date.  (Emphasis added.)  

Indeed, we’re already witnessing that projected impact occurring before our very eyes.  

According to a U.S. Senate Committee on Homeland Security and Governmental Affairs report earlier this year, drug shortages have already reached record highs after jumping 30% from 2021 to the end of 2022:  

Shortages of critical medications continue to rise – including drugs used in hospital emergency rooms and to treat cancer, prescription medications, and even common over-the-counter treatments like children’s cold and flu medicine.  The number of active drug shortages in the U.S. reached a peak of 295 at the end of 2022.  …  Between 2021 and 2022, new drug shortages increased by nearly 30 percent.  At the end of 2022, drug shortages experienced a record five-year high of 295 active drug shortages.  

A recent warning from the American Cancer Society confirmed that Senate report, citing emerging nationwide shortages of chemotherapy drugs and other cancer medicines that in turn “lead to delays in treatment that could result in worse outcomes.”  

Accordingly, the Biden Administration is already making America more like Venezuela.  

Exacerbating matters, the University of Chicago study highlights another indirect unintended effect of increased drug unavailability.  Namely, fewer drug treatments mean higher spending on other forms of treatment:    

Health care spending outside of drugs will be raised because new drugs on average reduce other forms of health care spending through cost offsets.  We estimate a 3.7 percent increase in medical services spending due to the decline in new drug approvals.  This means that budget savings from this agreement need to take into account the lack of new drug approvals that will lead to higher spending in other healthcare settings.  As patients would have to rely on other ways to receive treatment or cures this would on average raise costs.  

Accordingly, the Biden Administration’s assault on pharmaceutical innovation is already triggering dangerous consequences, with more to come in future years.  Pharmaceutical manufacturers are challenging these price control schemes in court, where the Biden Administration has suffered humiliating defeat after defeat.  

It would be better, however, if the Biden Administration or Congress put an end to this growing peril without necessitating years of costly litigation in the judicial branch.  Too many American lives are at stake.