Pelosi’s Drug Price Controls, Confiscatory Taxes and Socialized Medicine for All

This morning, Speaker of the House Nancy Pelosi unveiled her long-awaited Socialist drug price control plan. It’s everything you’d expect from the now Socialist Democratic party which now openly embraces socialism and government control of everything.


Pelosi’s exremist plan titled the Lower Drug Costs Now Act, includes multiple provisions allowing the government to interfere in the healthcare market, mandating direct negotiation with manufacturers, severe fines and taxes and substantial changes to the competitive Medicare Part D program:

It calls for the Department of Health and Human Services to target 250 drugs that lack competition. Under the plan, their prices would be about 1.2 times the average of the medication’s cost in other nations. The plan also orders fines — as much as a 95 percent tax of a drug’s gross sales — for companies that don’t negotiate price.

This steep, escalating penalty creates a powerful financial incentive for drug manufacturers to negotiate and abide by the final price, while ensuring that patients maintain uninterrupted access to the medicines they need.

After this, the Secretary can negotiate with companies further, forcing them to accept even lower prices.

The Pelosi plan would drastically distort market forces that create incentives for private companies to create new products, reducing patient choice and ultimately hurting the U.S. health system and industry.

Under Pelosi’s scheme bureaucrats will establish a maximum price which the government will pay for a drug, based upon an average taken from foreign countries which already use socialist pricing to determine the cost of their medicines.


Under current law, the Health and Human Services Secretary is barred from engaging in negotiations for prescription drugs covered by Medicare. That prohibition was contained in 2003 Medicare Modernization Act that set up Medicare’s prescription drug benefit.

Pelosi’s price controls caps the market, skews market forces which incentivize companies to compete with one another, while simultaneously forcing companies to adjust their business models. This new market will force pharmaceutical manufacturers to reduce investment into research and development of new cures as there will be less capital available to reinvest.

I should be clear, Pelosi’s price control plan is not a voluntary process. One of the cornerstones of our market-based economy is any firm or individual’s ability to enter into or not enter into a contract or negotiation which they do not want. Speaker Pelosi’s price control scheme eliminates that longstanding principle. Instead the plan forces companies to accept negotiation with the government. Worse, these companies are selected by the U.S. Secretary of Health and Human Services, meaning that they have no recourse to even challenge the premise of the negotiations. The government controls their choices.

But Pelosi’scheme gets even worse, if the government negotiates a price which the company cannot accept, they have no choice. Speaker Pelosi’s bill gives companies two options, accept the new price or pay an “escalating excise tax” on the company’s “annual gross sales” that will start at 65 percent.


The tax can escalate and finally maxes out at 95 percent. That’s right the government could charge private companies a 95 percent tax on their sales. This is, obviously, untenable and unacceptable. How would a company afford to pay its employees, offer benefits, pay its rent, if 95 percent of their revenue is going to the government?

Pelosi’s price control bill even imposes a retroactive inflationary penalty for all drugs covered under Medicare Parts B and D. The proposal links price increases to the average rate of inflation, meaning that if a drug’s price rises above the rate of inflation than the manufacturer would be forced to pay the difference to the U.S. Treasury Department in the form of a rebate. This retroactivity goes back to 2016, the U.S. Constitution’s prohibition on ex post facto laws be damned.

Finally, the plan forces these companies to offer these prices, negotiated via the government’s buying power in Medicare, to all payers, meaning that Pelosi’s price caps would extend to the private market, creating an even greater chilling effect.

While I’m not surprised Socialist Democrats have proposed a plan that ignores reality in favor of government control, the thoughtlessness of linking prices to inflation is staggering.

Look, we’re all frustrated that healthcare expenses are high, and it can be hard to afford the medicines we need. But the solution to these questions is not more government control. It is not more Socialism. The answer is having a free-market for price competition, faster FDA approval times, and price transparency.


Pelosi’s plan is a step toward the Socialists’ $30 trillion Medicare for All, under which the Socialist Democrats will try to take employer-provided health care away from more than 150 million Americans. I look forward to watching Conservatives reject it.



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