Republicans Need to Repeal the Biden Inflation Expansion Act

In politics and in life, timing is everything. When people are operating on different timelines, it can cause problems.

Think of a sports team that wants to build through the draft, eschewing spending on high-priced free agents. It is willing to accept losses in the present, and maybe next year, because it can draft generational young talent. Fans, on the other hand, want to win now. Why should they buy tickets to see a lousy team or buy hats and shirts that advertise that they support a lousy team? They want a shot at the title every year, rather than delaying gratification for years to come.

Members of the House of Representatives are like those sports fans. For them, there often is no tomorrow, as they must stand for reelection every two years. Their terms are always about to end. So they are happy to try to give handouts to voters in any way they can.

That is a reason why lawmakers jump at ideas like price controls. They think if they can set a ceiling on the prices of things that voters want and need, they can get credit at the ballot box. The fact that price increases will end up being paid by consumers never comes into play because lawmakers can always simply blame greedy companies.

On the other hand, consider the dilemma faced by pharmaceutical companies. They have to take the long view on everything because it takes more than a decade to develop, test, market, and deliver a medicine. They need government approval at every step of the way, and that is another reason lawmakers have real power over them.

This brings us to one of today’s pressing legislative problems. The “Inflation Reduction Act,” or IRA. More accurately, the “Inflation Expansion Act,” because the law never lowered prices and high inflation was one of the reasons why President Biden was downsized by the voters last November.

The IRA was passed in late 2022 by a Democratic Congress without a single Republican vote. Because of the nature of politics, the Congress that passed the IRA is already gone. So is the Congress which replaced it. So is the president who pushed for it and signed it. Yet the law itself remains.

In fact, the law is just starting to bite. “One of the Act’s key drug-related provisions is a requirement for the Secretary of Health and Human Services (HHS) to negotiate prices with drug companies for certain drugs covered under Medicare Part D (starting in 2026) and Part B (starting in 2028),” the medical policy Web site KFF wrote this year. The most recent list of drugs “include the popular diabetes and obesity drugs Ozempic and Wegovy, along with other drugs used to treat asthma and chronic obstructive pulmonary disease, type 2 diabetes, different types of cancer, and other medical conditions.”

“Negotiate” isn’t quite the right word. It feels more like the government setting prices and forcing the companies to take it or leave it for large populations that might benefit from a certain drug.

“As the drafters of the IRA presumably anticipated, none of the manufacturers chose to run afoul of the 95-percent excise tax and instead accepted the decision of the Centers for Medicare and Medicaid Services,” wrote economist Douglas Holtz-Eakin. “The excise tax provides CMS with the force necessary to ensure that manufacturers ‘voluntarily’ adopt government-mandated prices for their brand name drugs.”

If lawmakers don’t act, there is a risk. The entire “negotiating” process “is likely to have pronounced implications for future economic policy by making price controls more palatable to the public and thus may see more widespread use as a policy tool,” as Holtz-Eakin warned.

But the good news is that the drafters of the IRA are now gone. If they are still in Congress, they have no power. Voters have opted, twice now, for Republican control of the House of Representatives. And Republican control of the Senate and White House.

It is time for a new Congress to act to repeal the entire IRA. This is a fundamental decision, but unlike the sports metaphor, lawmakers can win now and also win later. But dumping the IRA, they would empower markets to bring drug prices down. They would also encourage drug makers to create new and better drugs for the decades ahead.

Timing is everything, and lawmakers need to act fast to get rid of the Inflation Reduction Act.

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• Peter Mihalick is a former legislative director and counsel to former Reps. Barbara Comstock, Virginia Republican, and Rodney Blum, Iowa Republican.