Diary

Could Trump’s Price Controls On Medicine Kill the COVID Vaccine?

Could Trump’s Price Controls On Medicine Kill the COVID Vaccine?
(AP Photo/Carolyn Kaster)

“The Republican Party wants to win elections in order to enact Republican policies,” scholar David Azerrad said at a recent discussion about the future of conservatism in America, “whereas the Democratic Party wants to win elections to ensure that the Republican Party never wins another election.”

In short: Republicans want to enact better policies; Democrats want to win despite their blatantly bad ones.

Unfortunately, since the allied institutions of news media, entertainment, and (worst of all) academia have given Democrats the megaphone of culture, their terrible ideas never get the scrutiny they demand. And more regrettable it seems now Republicans are leaning left just to keep up.

President Trump is issuing an executive order on drug pricing expected to tie the prices we pay for drugs to the prices in socialist countries. Following the International Pricing Index (IPI), the Administration’s order would peg what America pays for a particular drug to the price paid in Europe and elsewhere. Another term for this is government price setting – which always, always fails.

Because Democrats and their unscrupulous allies have that megaphone, they appear to be shouting the President in the direction of government takeover of healthcare and further down the road to Medicare for All. The President has railed against the Democrat takeover of health care, declaring in the 2020 SOTU, “We will never let socialism destroy American health care.”

But here we are.

Democrats haven’t even gotten Obamacare to work for anyone but the insurance companies – who are making record profits under the unaffordable Affordable Health Care Act – but somehow that means they’re entitled to take all of healthcare away from Americans.  And alas the Trump Administration may help them on their way.

The biggest casualty of price controls – virtually any government intrusion on healthcare – would be domestic drug innovation. The United States creates about two-thirds of all new medicines, specifically because our free-market healthcare system rejects price controls and rewards the innovative, and without incentives those drugs don’t get made.

Bringing a new drug from the lab to a patient is a costly, time-consuming, risky affair: average R&D demands an investment of $2 billion over 10 years, and only 12 percent of experimental treatments that enter clinical trials get FDA approval. Indeed, the Trump Administration’s own Council of Economic Advisors warned against the damage of foreign price fixing two years ago when they wrote that if the US had followed other nations down that path, “the world may not have highly valuable treatments for diseases that required significant investment.”

According to the Congressional Budget Office, price controls would slash revenues at research firms by $1 trillion in the next 10 years, profits which would come right out of their R&D budgets. Given that the world needs someone to invent some really, really important vaccine right now, the leader of the country most likely to develop said vaccine should probably stay out of the way – or else we can just get used to wearing masks everywhere and no new movies in theaters.

Price controls will hurt medicine of the future, but not before they damage the medicine of the present too.

As has occurred in other nations with socialized medicine, price controls lead to health care shortages. In 2019, the UK experienced a shortage of 10,000 doctors and 43,000 nurses, presenting a clear danger to the 4.5 million patients waiting for hospitalization at any given point.

Just as he has been with bad trade deals and military free-loaders, President Trump is right to say the amount Americans pay for drugs compared to other developed nations is unfair. But pegging our drug prices to the IPI is the wrong way to address this. Rather, the President must negotiate better trade agreements and even appoint a special biopharmaceutical negotiator with the U.S. Trade Representative to ensure nations value US medicines the way they should.

Fmr. Ambassador Jon Huntsman Jr has some time on his hands now, so he should be at the top of the list.

Instead of setting drug prices, the President should look to real reforms that empower patients, preserve access, promote price transparency, and improve affordability. The Republican Party wants to win elections, and the shoe-in that 2020 was four months ago is now precarious. But swallowing the Democrats’ bad ideas is the wrong path to go down.

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