July 6, 2022

After months and months of petty negotiations over Build Back Better, Democrats have finalized a dangerous proposal that would impose price controls to “lower drug costs.” In reality, this is just a larger scheme to win over West Virginia Senator Joe Manchin on the massive looming spending bill. The proposal and support from the moderate senator mean that America’s innovative healthcare system could eventually fail all patients, especially seniors.

Manchin, along with other liberal politicians, claims that a Medicare “negotiation” scheme would reduce drug costs for the average consumer. In fact, price controls would do more harm than good to medical innovation. The government’s unnecessary involvement in directly setting drug costs would result in a loss of 1.5% of research and development (R&D) for every 1% of lost revenue. This decline in R&D would ultimately reduce the number of drugs reaching the market, for which many consumers can’t risk losing access. Lawmakers’ support for these price controls would have a damaging impact on healthcare innovation.

Adverse impacts of drug price controls are not a new phenomenon, and Canada is proof of that. Canada was far behind the rest of the world in COVID-19 vaccine development, mainly due to the negative impact of price controls in the country. In fact, during the first year of the pandemic, Canada’s vaccination rates were so low that the U.S. issued a travel warning because of the country’s inefficient COVID-19 response.

Politicians like Senator Manchin should not sacrifice America’s healthcare system to misguided policies. He should instead pursue other methods to effectively lower drug costs, like regulating Pharmacy Benefit Managers (PBMs).

PBMs negotiate rebates and discounts with drug manufacturers, giving them the last word on which drugs should be covered by insurance companies and at what cost. These corporate middlemen often take advantage of their position as negotiators to rake in savings for themselves when they should be passed down to consumers at the pharmacy counter.

If Senator Manchin and his allies on the left side of the aisle truly want to lower drug costs for consumers, they should consider PBMs’ harmful practices and ensure that savings are going into the proper hands—seniors.

Implementing price controls is the wrong solution to this problem. As seen in Canada, price controls starve countries of innovation and lifesaving treatments. Congress must ask themselves, “What is more important—the health of American citizens or the profits of PBMs?” The choice is clear, and leaders on Capitol Hill should do Americans a favor and address drug costs with a solution that would work: regulating PBMs’ greedy behavior.