The wrongly titled ‘Inflation Reduction Act’ (IRA) contained a devious provision that will impose a tax on seniors who purchase prescription drugs. The IRA does this all in the name of ‘reducing prices on seniors’ – healthcare double speak. The Biden administration pushed a policy that sounds good but in reality hurts seniors. Remember President Obama’s ‘if you like your health care plan, you'll be able to keep your health care plan' false promise? Well, here we go again.
Rather than strengthen Medicare or make it easier for seniors to afford their medicine, the IRA is holding seniors hostage – threatening higher prices – as a way to bully drug companies into complying to a detrimental price setting regime – a regime that will also have a long-term negative impact on science and innovation. The IRA threatens seniors with higher drug costs today as it threatens new cures for tomorrow. It is one of the worst pieces of legislation ever to pass Congress. The government mandating drug prices will only disrupt the lives and the health of American patients – especially seniors on Medicare.
If a pharmaceutical company does not agree to the government’s price setting – ordered by Biden’s Department of Health and Human Services (HHS) – the Internal Revenue Service (IRS) will impose an artificial price hike – a tax on seniors and patients – to punish the drug maker. A policy that makes zero health sense – how is increasing the cost of medicine a way of reducing drug prices? Price control regimes poison medical progress and threaten access to affordable health care.
This ‘Biden Drug Tax’ seeks to raise revenues – while threatening Medicare – on the backs of seniors. Health care policy can be divisive, however, when it comes to drug innovation, preserving Medicare, and delivering high-quality health care, there should be no real partisan disagreement. Unfortunately, the IRA is a giant leap in the wrong direction; President Biden put politics over patients. Now is time for seniors, patient advocacy groups, and the entire health care community to push back (at least) against the most damaging elements of the IRA, like taxing medicines that seniors need. Perhaps the Biden administration will come to its senses and reconsider its price setting scheme?
The IRA promised to lower the cost burden on seniors. The Centers for Medicare & Medicaid Services (CMS) described it this way: Medicare will be able to negotiate directly with drug manufacturers to lower the price of some of the costliest single-source brand-name Medicare Part B and Part D drugs. This means that people with Medicare will have increased access to innovative, life-saving treatments, and the costs will be lower for both them and Medicare. However, governments do not negotiate, governments mandate. In fact, the term ‘negotiate’ is dishonest because one side demanding, and the other side capitulating is not a negotiation – it’s an intimidation. If drug companies say ‘no’, the government mandates higher prices.
A company refuses the ‘negotiated price’ … what happens? According to the IRS proposed rule, ‘The Biden Drug Tax’ increases from 65% to 90% over a 271 day period.
What if the company complies with the government’s price setting? Innovation, investment in new cures, and patient access to care are all in jeopardy. The IRA will make it more expensive (and risky) to invest science and resources into cutting-edge research, treatment, and new cures. Patients suffering from Alzheimer's disease, type 2 diabetes, and other devastating illnesses will suffer due to IRA's ill-considered, anti-science policies. Research dollars will disappear or go elsewhere, leaving patients to suffer.
The Inflation Reduction Act is bad medicine.
Jerry Rogers is the editor at RealClearPolicy and RealClearHealth. He is the host of the 'Jerry Rogers Show' on WBAL NewsRadio and the Federal Newswire’s ‘Business of America’ podcast. Follow him on Twitter @JerryRogersShow.
