Price Controls Will Create an Invisible Graveyard of Americans | Citizens Against Government Waste

Price Controls Will Create an Invisible Graveyard of Americans

The WasteWatcher

The Build Back Better Act (BBBA), H.R. 5376, contains lethal policies that will leave Americans defenseless.  The prescription drug price controls embedded in this deplorable legislation will significantly decrease the research and development needed for future cures, which will eventually mean the difference between life and death. 

Throughout history, price controls have led to shortages and rationing in every industry on which they are imposed.  But waiting on long lines for gas during the price controls on oil that were established in 1970 is not the same as waiting for a treatment or cure for a life-threatening disease.

Under the provisions of H.R. 5376, if a pharmaceutical company refuses to sell a drug at the “fair” price set by the federal government, the manufacturer will be charged with an excise tax, starting at 65 percent of a company’s previous annual gross sales and rising 10 percent every quarter to 95 percent if the company doesn’t comply.  Without defining a tax base, which the bill does not do, the impact would be a 1,900 percent tax rate.    

If the BBBA is enacted into law with its current provisions, the result will be a significant decrease in future cures, leaving an invisible graveyard of patients who never receive the cures they desperately need.  An August 2021 Congressional Budget Office (CBO) Simulation Model of New Drug Development report projected that H.R. 3, on which the provisions of the BBBA are based, will decrease new drugs entering the marketplace by 8 percent in the third decade, resulting in at least 60 lost treatments. 

But an analysis of the BBBA as written determined that the CBO projection is too conservative, and the potential loss of future cures is much greater.  In a November 29, 2021, issue brief, University of Chicago economists Dr. Thomas Philipson and Troy Durie found that H.R. 5376 “will reduce revenues by 12.0 percent through 2039 and therefore that the evidence base predicts that R&D spending will fall about 18.5 percent, amounting to $663 billion. We find that this cut in R&D activity leads to 135 fewer new drugs.  This drop in new drugs is predicted to generate a loss of 331.5 million life years in the U.S., 31 times as large as the 10.7 million life years lost from COVID-19 in the U.S. to date.  These estimated effects on the number of new drugs brought to market are 27 times larger than projected by CBO, which finds only 5 drugs will be lost through 2039, equaling a 0.63 percent reduction.” 

The projected amount of life lost to reckless decision-making in Congress is the equivalent of every one of the 329.5 million Americans alive today dying at the same time.

As members of Congress sit down with their families over the holidays, they should look around at everyone at the table and think about which one of them – spouse, mother, father, sister, brother, children, or grandchildren – will not get the treatment or cure they would need to save their lives from disease if they already voted or are considering voting in favor of H.R. 5376.  Perhaps if the consequences of pharmaceutical price controls become more personal, enough senators and representatives will change their minds and remove them from the legislation.  Otherwise, they will be financially and morally responsible for the resulting devastation to pharmaceutical research and development that will result in higher costs, less accessibility, and fewer treatments and cures for every member of their family, and every other American.