Kamala Harris just released her own economic plan, triggering merciless reviews from even left-wing outlets like The Washington Post.
Credit Post columnist Catherine Rampell with a scathing analysis that received the most attention entitled, “When Your Opponent Calls You a ‘Communist,’ Maybe Don’t Propose Price Controls.”
Proposing price controls, however, is precisely what Harris did.
In so doing, she betrayed an ideological extremism that should terrify the American electorate. Price controls maintain an uninterrupted record of failure and deprivation, because they don’t control prices so much as they drive the products they target out of existence.
And the prospect of price controls on lifesaving drugs is even more serious, because it’s literally a matter of life and death.
This week, the Democratic National Committee also released its 2024 platform, which echoes Harris’s agenda by expanding Biden administration drug price controls through such things as the so-called “Inflation Reduction Act” (on which Harris herself cast the deciding vote). Those policies have already triggered unprecedented drug shortages during the Biden-Harris administration.
They won’t acknowledge reality by labeling them price controls, of course. Instead, they claim that they merely empower the federal government to “negotiate” prices. But understanding the way in which they work removes that preposterous veil.
Under their plan, federal agencies set target prices far below those drugs’ actual market prices, and any manufacturer that finds itself incapable of meeting the government’s below-market price is penalized at a minimum of 186% of revenues, potentially all the way up to 1,900%.
That’s not a misprint.
Although it has received far too little attention, we have already begun to experience unprecedented drug shortages. Specifically, a 2023 Senate Homeland Security report showed that drug shortages increased 30% to a record high from 2021 through 2022:
Shortages of critical medications continue to rise – including drugs used in hospital emergency rooms and to treat cancer, prescription medications, and even common over-the-counter treatments like children’s cold and flu medicine. The number of active drug shortages in the U.S. reached a peak of 295 at the end of 2022. … Between 2021 and 2022, new drug shortages increased by nearly 30 percent. At the end of 2022, drug shortages experienced a record five-year high of 295 active drug shortages.
The American Cancer Society issued the same warning, citing increased shortages in chemotherapy drugs and cancer medicine, as well as consequent “delays in treatment that could result in worse outcomes.”
That’s the real-world reality of government price controls under the fig leaf label of “negotiation.”
That also confirms what a 2021 analysis by economists from the University of Chicago predicted would happen under the Biden-Harris price control scheme. Namely, fewer drugs and declines in life and health outcomes:
R&D spending will be about 18.5 percent lower, or $663 billion, through 2039. This equates to new drug therapies being delayed up to 7 years due to less R&D spending leading to 135 fewer new drug approvals through 2039. The declines in new drug approvals could potentially lead to 331.5 million life years lost through 2039. For comparison, this is 31 times higher than the life years lost due to COVID-19 to date.
Paradoxically, the study highlighted how that reduction in drug innovation and availability would actually increase healthcare costs overall. “Health care spending outside of drugs,” it said, “will be raised because new drugs on average reduce other forms of health care spending through cost offsets.”
So drug price controls lower health outcomes while actually raising overall healthcare costs. Sounds like a typical Biden-Harris operation.
It’s important to highlight that even the United Nations World Health Organization (WHO) warns that government price controls keep new drugs out of the consumer marketplace. “Such price controls,” it notes, “combined with the threat of market lockout or intellectual property infringement, prevent drug companies from charging market rates for their products, while delaying the availability of new cures to patients living in countries implementing those policies.”
Those inescapable laws of economics threaten the innovative U.S. pharmaceutical industry, which create approximately two-thirds of all new drugs introduced to the world. In other words, for all of the sloppy criticisms leveled against it, our pharmaceutical industry creates twice as many new drugs as the rest of the world combined.
The U.S. pharmaceutical industry also enables American consumers to access far more of those lifesaving drugs than other industrialized countries. Of 270 new drugs introduced in the U.S. between 2011 and 2018, to employ just one metric, just 52% were available to Canadians, 67% in Germany, 64% in Britain, 53% in France, 48% in Japan and 41% in Australia.
That’s a record of which Americans should be proud. And it’s certainly not something that we should risk with Kamala Harris’s price control plan that received rightful ridicule even from left-wing pundits.
Timothy H. Lee is Senior Vice President of legal and public affairs at the Center for Individual Freedom.
Reprinted with Permission from CFIF.org – By Timothy H. Lee
The opinions expressed by columnists are their own and do not necessarily represent the views of AMAC or AMAC Action.