Joe Biden’s Inflation Reduction Act included a much hailed feature purporting to lower the cost of prescription drugs. The Biden Administration advertised that they would negotiate with drug companies to lower the cost of pharmaceuticals for consumers. In reality, the administration wants to impose a drug tax that will not lower drug prices but raise them.
The drug companies that do not agree to price point sent by the government during these “negotiations” will be subject to a 95% excise tax on the sale of their medicine. That cost will be passed on to all the consumers, including seniors. The new inflated cost will not be covered by the government for seniors because the medicine would be dropped from Medicare part D should they not agree with the negotiated price set by the government.
The administration has selected 10 new drugs to begin “negotiation” with the government. The negotiations with participating drug companies will occur in 2023 and 2024, and any negotiated prices will become effective beginning in 2026. But it is not only 10 drugs targeted by the government, there are another 50 drugs slated to come under fire by the Biden drug tax.
This means that these drug companies either give the drugs away free to Medicare patients or they are taxed so heavily no one can afford to buy them. For the dug companies, “this means either cutting back production of the price-controlled drug and making it scarcer for consumers, or making cuts elsewhere, in research and development of other, newer and better drugs. Either way, it is the prescription drug consumers who wind up paying the price.” What incentive will they have to discover new drugs? New emerging therapies would be forced into a “negotiation” or priced out of reach to the average consumer.
Forced negotiation for the drug companies with the government also sets a dangerous precedent. What other arenas will the government enter to “negotiate” price controls? With all the other cost of living increase under Biden like gas prices, food prices and housing expenses, the American consumer doesn’t need an increase in the price of their medication.