President Biden Again Calls for Price Controls | Citizens Against Government Waste

President Biden Again Calls for Price Controls

The WasteWatcher

President Biden made a brief speech on December 6, 2021, discussing the pharmaceutical price controls that are contained in the massive $1.75 trillion “social infrastructure” bill, the Build Back Better Act (BBBA).  The speech was not much different than his November 2, 2021, speech on drug pricing.  But Democrats are becoming increasingly desperate to pass the BBBA before Christmas because the more voters learn about what is in the bill, the less they like it.  In an attempt to turn the tide, an attack speech from the President was deemed necessary and America’s biopharmaceutical companies were once again the target.

After President Biden began his speech by acknowledging the trailblazing work the pharmaceutical companies did in developing COVID-19 vaccines and therapies in record time, he immediately pivoted to the usual diatribe of how U.S. citizens pay more for prescription drugs than citizens in any other country.  Politicians like President Biden never mention the fact that other countries utilize price controls to keep their drug prices artificially low as part of their socialized healthcare systems.  These debilitating policies caused Europe to lose its lead in pharmaceutical research to the U.S. more than 20 years ago. Now these countries ride on U.S.-funded research, paid for through health insurance, taxes, and private investments.

The President went on to list the various drug pricing initiatives in the BBBA and repeated the falsehood that the bill would allow the secretary of Health and Human Services to negotiate drug prices in Medicare.  There will be set formulas, inflation rebates, and taxes in the legislation to determine costs and fines for non-compliance.  Citizens Against Government Waste (CAGW) has written that “Lenin, Stalin, and Capone would be proud” of this system.  It is the opposite of the true negotiations that occur among drug manufacturers, insurers, pharmacy benefit managers and pharmacists.  CAGW has also laid out in detail how the price controls in the BBBA would destroy biopharmaceutical innovation in the November issue brief, “Pharmaceutical Price Controls are Bad Medicine.”

The White House event included two young women with diabetes who have had trouble affording their insulin.  President Biden focused on the medication’s cost, stating that, “It was almost exactly 100 years ago that a 14-year-old boy in Canada dying of diabetes became the first person to receive an injection of insulin.  Today, one bottle of this lifesaving liquid costs less than $10 to manufacture.  But the cr- [STET] -- but in certain types of insulin, prices increased by 15 percent or more each year for the past decade.”

Comparing today’s insulin with drugs produced 100 years ago is on par with comparing the 1921 candlestick telephone with today’s mobile phone.  The original insulin required several injections a day and the medication came from cattle and pigs.  Scientists have continued to develop and improve insulin so that it would be purer, better acting, and its effects would last longer.  The first recombinant DNA human insulin was developed in 1978.  Today’s engineered insulin analogs are more precise and come in different types, like longer or rapid-acting insulins, provide more flexibility, and have enabled people to control their blood sugar more easily and evade serious complications.

The President said, “Depending on the nature of someone’s Type 1 diabetes, the average sticker price for a month’s supply of insulin is about $375.  But some people — it can be as high as $1000 a month because they need to take more.”  But the sticker price is the list price and it is rarely what is paid.  The price paid will depend on whether a diabetic has health insurance and their type of insurance.  There are 57 percent of diabetics who are insured through a public program, like Medicaid, Medicare, or the Children’s Health Insurance Program.  The BBBA would limit the cost of insulin to $35 a month, a price control that would hurt future innovation.

President Biden failed to mention that pharmaceutical companies offer assistance to those who need help accessing their medications.  Instead of imposing government price controls, reforms should be implemented to help increase competition for not only insulin products and lower their costs, but also for all medications.

The development of newer, more complex, and highly effective insulins was certainly a reason costs increased over the past two decades, although price increases have slowed in recent years.  Changes made to the entire healthcare system under the Patient Protection and Affordable Care Act, or Obamacare, are part of the equation too.  More competition helps to lower prices and new insulin biosimilars are at last being introduced to the market that will compete with brand name drugs and help to lower costs.  That needs to continue with faster Food and Drug Administration approvals.

Since most insulin costs come from Medicare Part D, restructuring the program by following the American Action Forum plan would help increase the use of biosimilar and generic drugs, encourage competition, and lower out-of-pocket costs for seniors.  By requiring health plans to cover more in the expanded initial coverage phase at 75 percent and having an out-of-pocket cap for beneficiaries, instead of the current structure that has the 70 percent mandatory payment by drug manufacturers in the coverage gap, which is a price control, Medicare Part D will behave more like private insurance and less like Medicaid.

The BBBA will cost far more than touted by President Biden and Congressional Democrats because the legislation is loaded with budget gimmicks, like certain programs that expire two to six years after enactment, and therefore not included in the Congressional Budget Office’s (CBO) $1.75 trillion estimate.  If all the BBBA proposals are made permanent, the cost would be $4.8 billion over 10 years and add $2.8 billion to the deficit.  And the drug price controls provisions, if implemented, will devastate our nation’s biopharmaceutical research.  Groundbreaking and more effective insulin products will come to a trickle, hurting the life-saving progress that has been made in controlling diabetes for millions of individuals in the United States and across the globe. No matter how many times President Biden makes the same speech, CAGW will make the same arguments that show how these policies are dangerous and the wrong solution to reducing the price of drugs.