It has been often said that in Washington, D.C. bad news comes out on a Friday afternoon and today, July 19, 2019, is no exception.  Inside Drug Pricing revealed that the White House has asked Senate Democrats to include two drug pricing provisions in the upcoming budget deal:  an inflationary rebate when drug prices in Medicare Part D rise higher than inflation and raising the rebate cap on drug prices in Medicaid.

These price controls are typical of how government responds to a problem it has created:  “fix it” with more government interference.  Congress has implemented price controls in government drug programs, from the Veterans Affairs, to the donut hole in Medicare Part D, to rebates in Medicaid.  When one side of a balloon is squeezed, the other side will inflate.  The same phenomenon has happened throughout the pharmaceutical market place, causing price distortions in the public and private sector.

Citizens Against Government Waste (CAGW) laid out in its July 8 WasteWatcher, “Senate Finance Committee Drug Pricing Changes - Market Driven or More Destructive Price Controls,” why inflationary rebates were very bad ideas.

The only solution to lower prices for any product is a free market, where there is competition and market-based price negotiations, not government interference.  Instead of adopting policies that countries with socialized healthcare systems use to keep costs down but destroy their pharmaceutical innovation, elected leaders in the U.S. should be looking to market solutions and quicker Food and Drug Administration approvals for both generic and innovative pharmaceuticals.