Biden-Harris drug price controls hit seniors in the wallet as costs are shifted

If there is one axiom we all know about Washington, DC, it is that it is rife with well-intentioned policies with unintended—read: harmful—consequences. A recent reminder of unintended policy consequences is the so-called Inflation Reduction Act.

The law was passed in August 2022 and is intended to help reduce the federal government's budget deficit, invest in renewable energy, lower drug prices and fight inflation, according to its advocates in Congress and the White House.

Two years later, we have sadly learned once again that noble intentions do not necessarily lead to good policy. The IRA has failed in many ways to achieve its aims.

A significant problem concerns the introduction of drug price controls that will take effect in 2026. Thanks to the IRA, the federal government now has broad powers to set drug prices under the so-called Medicare Drug Price Negotiation Program.

A recent analysis warns that these price controls will likely lead to higher costs for millions of seniors and disabled Americans who rely on Medicare Part D. This should come as no surprise—price controls simply don't work, and if they're implemented, someone will eventually have to pay for them. Nor should it be surprising that government spending doesn't reduce inflation. History shows the opposite.

The first group of affected drugs includes ten drugs that have a “maximum fair price” set under the IRA. In 2024, Medicare enrollees will typically pay fixed copayments for most of these drugs. For millions of these enrollees, artificially set drug costs will slow their progress toward their Part D deductible limit, forcing them to face higher out-of-pocket costs.

For low-income recipients, the cost increases are significant—an average of 27 percent more. Asian and black recipients who rely on medicines covered by an MFP could face average increases of 13 percent and 15 percent, respectively. As is often the case, the most vulnerable among us will bear the brunt of bad policy.

As bad as all this is, it gets worse. The predictable effects of price controls on goods and services are a well-researched topic in economics, making the typical combination of good intentions and unintended consequences a hard excuse to swallow.

The question then becomes who knew what and when. Did Health and Human Services Secretary Xavier Becerra and Center for Medicare and Medicaid Services Director Chiquita Brooks-LaSure simply not consider the impact of price controls on prescription drugs for seniors?

Government agencies rarely pass new legislation without conducting such forecasts. Yet both Mr. Becerra and Ms. Brooks-LaSure were among those most vocal in supporting and boasting about the IRA's new price control mandate.

Even progressive advocacy groups whose long-term goal is to eliminate private health insurance in favor of a government-run health care system (e.g. Medicare for All)—as Vice President Harris proposed during her 2020 presidential bid—have been vocal in their support for price controls as a means of transitioning America to a government-run health care system.

What influence did these special interests have on the Department of Health and Human Services' analysis of the new law's impact on drug prices in Medicare? Did they suppress research that predicted massive price increases for the Medicare program's most vulnerable members?

Let's not forget the independent experts who serve on an advisory panel called MedPAC. Did they also fail to evaluate the impact of price controls, or did progressive dreams of universal health insurance simply silence all dissenting views? Scientific integrity only works when objective analysis is allowed.

Seniors have a right to answers as they seek new ways to afford skyrocketing prescription drug prices under the Biden-Harris administration and the “well-intentioned” Inflation Reduction Act.

The most likely truth is that American seniors are being used as guinea pigs or, at best, as eggs for the omelette of single-payer reform.

My organization has been asking these difficult questions and is prepared to hold federal officials accountable when they refuse to provide answers. So far, it looks like we'll probably have to see them in court. Let's just hope it's not too late for seniors asking who is responsible for their increasingly unaffordable drug prices.