The Senate is pursuing a repackaged bill that encompasses some of the provisions in the Build Back Better Act (BBBA) that passed the House but not the Senate in 2021. While the spending provisions of the legislation were outrageous and would exacerbate the worst inflation in 40 years (which was largely caused by prior excessive federal spending), the worst provisions of the BBBA were not directly related to more spending.  

The BBBA included language found in  H.R. 3, The Lower Costs Now Drug Act, which imposes price controls that will result in shortages, raise costs, significantly destroy U.S. leadership in pharmaceutical research and development, and take a substantial step closer to a full government takeover of healthcare.

As Citizens Against Government Waste (CAGW) noted in its November 2021 issue brief, “Pharmaceutical Price Controls are Bad Medicine,” which cited the history and harm of price controls, the U.S. biopharmaceutical industry leads the world in cures and treatments as the result of its significant investment in research and development.  The industry spent nearly $1 trillion on research and development between 1999 and 2020 and reinvests 27.7 percent of its sales into R&D, which is about six times higher than other industries.  The economic impact includes the employment of 811,000 direct workers, which support another 4 million jobs. 

The creation of safe and effective COVID-19 vaccines, which saved millions of lives, was an extraordinary achievement, and the innovation has continued nonstop, as there will be Omicron-specific vaccines available in the fall of 2022.  It would make sense for Congress to leave the industry alone to create more life-saving drugs and treatments, but if they agree to include in a revised BBBA legislative language like that included in H.R. 3, it will give the government enormous authority to set prices, establish a price ceiling, and mandate discounts, which will severely limit future cures.

A Congressional Budget Office Simulation Model of New Drug Development projects that H.R. 3, the price control provision found in the BBBA, will decrease new drugs entering the marketplace by 8 percent in the third decade, resulting in 60 lost treatments.  However, this appears to be an underestimate, as a

November 29, 2021 report by economist Dr. Thomas Philipson and Troy Durie from the University of Chicago found that the BBBA, “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. 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 five drugs will be lost through 2039, equaling a 0.63 percent reduction.”

In other words, the price controls found in the BBBA or any alternative thereto will destroy the development of future cures and mean the difference between life or death for millions of patients living now or in the future with a debilitating disease.  These price controls will also hurt generic drug development as investors will not know which name brand drugs will be subject to a price cap or an excise tax of up to 1,900 percent and will therefore be more likely to invest their money in other industries.

If the provisions of H.R. 3 or any price controls are included in a “revised” BBBA, the federal government would be creating an unprecedented, dangerous, and damaging impediment to the research and development of future cures. The Senate should continue to reject this proposal.