Dems’ Drug Price Controls Would Mean Fewer Drugs And Fewer Jobs

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Hundreds of lifesaving therapies will never be invented, and as many as 1.1 million jobs will be lost if Senate Democrats successfully expand their prescription drug price-fixing program, according to a major new study.

The study, conducted by the research group Vital Transformation, modeled the effects of the SMART Prices Act. Sponsored by 28 Democratic senators including Amy Klobuchar, D-Minn., Peter Welch, D-Vt., and Elizabeth Warren, D-Mass., the bill would expand the price-control scheme approved last year for certain drugs under Medicare as part of the Inflation Reduction Act.

The IRA allows the government to implement price controls on chemically synthesized small-molecule drugs nine years after they receive regulatory approval and on biologics 13 years after approval. In 2026, 10 prescription drugs dispensed through Medicare’s Part D drug benefit would be subject to the price controls. An additional 15 would be ensnared in 2027. Another 15 dispensed in doctor’s offices through Medicare Part B or through the prescription benefit Part D would come up for price controls in 2028. And another 20 across both programs would be hit in 2029.

That’s a lot of price-fixing. The SMART Prices Act would go further. It would allow the government to start dictating prices just five years after regulatory approval. It would double the number of medicines subject to the price controls. And it would allow the government to create a national formulary of medicines—and thereby refuse to cover some medicines.

What the Vital Transformation researchers found should alarm patients. By expanding the IRA’s price-control scheme, the SMART Prices Act would cause drug company earnings to decline an estimated 37%.

Drug firms spend about one-fourth of their revenue on research and development. So the price controls would have the effect of vaporizing billions and billions of dollars in research into new therapies.

The price controls would be levied on the “most successful and innovative therapies” so as to save the government the most money. Those blockbusters are what “fund a majority of the R&D in the biopharma ecosystem,” the Vital Transformation report says.

Less spending on research almost certainly means fewer drugs would make it through the expensive and time-consuming FDA approval process. Vital Transformation’s researchers found that prescription price controls of the sort contemplated by the SMART Prices Act would result in a 68% reduction in new FDA-approved medications. Over 10 years, that’s equivalent to 237 new therapies never making it to market—and to patients.

Millions of families are desperate for effective new therapies for cancer, crippling autoimmune disorders, and heartbreaking conditions like Alzheimer’s disease. The SMART Prices Act would ensure that they’d continue to wait. People whose lives might have been saved by those never-developed drugs will die. They should be considered casualties of the SMART Prices Act.

In addition to the hundreds of lifesaving treatments that patients may never see, the Act would kill jobs—as many as 1.1 million of them.

Because the bill’s price controls would lead to less revenue and fewer new drugs, the jobs of people who would have researched, developed, produced, and marketed those drugs would also disappear. These jobs would be lost at drugmakers directly and at firms that support them, like research labs and manufacturing facilities.

President Ronald Reagan once said that “the nine most terrifying words in the English language are: I’m from the government, and I’m here to help.” If Democrats are successful in their attempt to subject ever-more drugs to price controls—and ever-more quickly—then they will have more than proved President Reagan right.

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