Nancy Pelosi’s Trojan Horse for Medicare for All

At a recent White House meeting, President Trump’s domestic policy council director Joe Grogan reportedly laid down the law to fellow Republicans: the president will not let Democrats outflank him on the left on drug prices, Grogan inveighed.

To which House Speaker Nancy Pelosi (D-Calif.) replied: hold my beer, Donald.

Pelosi on September 19 released a bill so far to the left that Republicans will be forced to choose just how much economic insanity they can stomach in pursuit of the perceived political windfalls to be had by demonizing drug companies.

For instance, the bill includes a provision an earlier leaked summary of the bill called a “steep, retroactive penalty” (if that’s what Pelosi calls it, watch out!) of 75 percent of the prior-year gross revenues of any drug company that doesn’t immediately step in line. The legal term of art for this is “taxing them into oblivion.”

The aim, clearly, is to divide the GOP. And, on that front, Republicans have given Pelosi quite a bit of rope to hang them with by flirting with a variety of ill-conceived proposals in the past months.

Pelosi has taken every Republican policy mistake on drug prices and weaponized it into something that could, in the words of former President Obama, “fundamentally transform” this country.

Take, for example, the International Pricing Index (IPI) proposed by the Trump HHS. The IPI would average the prices paid for drugs in 16 nations and use that in setting the reimbursement rates for Medicare.

It’s a bad idea because the 16 nations mostly use price controls to keep their rates artificially low, so using those “prices” in a reference index means simply importing the price controls of those nations.

Pelosi, in her bill, limits the reference group to the six most socialistic countries in the 16 considered by the IPI, and tremendously raises the stakes of how the reference “price” will be used, such that it would be a de facto price control for the entire U.S. market.

Unlike the various price control schemes Republicans have been fooling around with, Pelosi’s aren’t limited to the reimbursement rates for Medicare. In Pelosi’s bill, when the government price control committee settles on what they think a fair price is, it becomes illegal to pay more for the drug, including for individuals on the private market, whether there are shortages or not.

And as far as the drug companies are concerned, it might as well be illegal to opt-out of the game entirely. Drug companies that don’t fall in line are subject to the 75 percent “steep, retroactive penalty” referenced above, which would put most companies out of business inside of a year.

As Steve Forbes correctly diagnosed when the bill’s details leaked last week, Pelosi’s bill is a Trojan Horse for Medicare for All. The bill’s strategic purpose is to eliminate the drug industry as a potential obstacle to the full government takeover.

Republicans may have quibbles with the drug companies, but most of them understand the role prices play in a supply-and-demand driven market, and that the United States is the largest and most important market for pharmaceutical drugs that remains after Europe long-ago succumbed to price controls. The United States drives medical innovation, and American companies are responsible for about half of all medical breakthroughs, a remarkably outsized share.

Pelosi’s bill is leading Republicans off a cliff. Endorsing a Pelosi-style command-and-control economy—proposals literally designed to be unpalatable to Republicans—is a fall the party can’t recover from.

How would Republicans ever hope to offer an alternative, free market vision on health care, when they favor a heavy-handed government takeover of the drug industry via draconian price controls and taxes openly designed to be punitive?

They can’t, and that’s the point. Republicans who back Pelosi’s left wing Trojan Horse might as well sign up for Bernie and Liz’s total socialist revolution while they’re at it—that’s the next station we’ll be headed to, anyway.

Alternatively, they could work on trade policies that stop European socialists from freeloading on the medical innovation we are funding, and cut down the absurd amounts of bureaucratic red tape that results in such huge costs to bring a new drug to the market in the first place.

For those of us who’d like to benefit—and would like our kids benefit—from the promise technology brings to medicine, let’s hope Republicans don’t follow Pelosi’s directions right off a cliff.

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About Andrew Quinlan

Andrew Quinlan is the president of the Center for Freedom and Prosperity.

Photo: Win McNamee/Getty Images

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