AARP’s $200 billion mirage: How price controls kill tomorrow’s medicine

WASHINGTON EXAMINER

AARP, the liberal lobbying organization that touts itself as America’s leading senior advocacy group, wants Democrats to greatly expand the Inflation Reduction Act’s drug price controls if they retake Congress and the White House.

To spur left-wing lawmakers into action, AARP recently released a report with an eye-popping conclusion: If Democrats change the IRA to add price controls on just 10 popular medicines that are currently exempt, it could save Medicare nearly $200 billion between 2029 and 2033.

The report is presumably meant to serve as a campaign-trail talking point for Democrats. And many senior voters will undoubtedly find that pitch enticing.

But there’s no such thing as a free lunch. AARP’s proposal would dramatically change Medicare. Seniors won’t necessarily find it easier to obtain already-existing treatments. But over time, far fewer new ones would reach the market.

In 2022, the last year Democrats had undivided control of Washington, they enacted the Inflation Reduction Act. That law empowered federal bureaucrats to set Medicare prices for certain brand-name drugs that don’t have any generic or biosimilar competitors.

Critics — myself included — warned at the time that these price controls would discourage medical research. Even the nonpartisan Congressional Budget Office projected that the law would result in fewer new drugs reaching patients.

Those warnings have already come to pass. Biotech companies have discontinued at least 56 research programs and 26 experimental drugs since the IRA became law just four years ago.

But even Democrats recognized that immediate, across-the-board price controls would gut medical innovation. So they built some guardrails into the IRA.

For instance, the IRA exempts newly FDA-approved drugs from price controls for at least nine years, so that biotech companies have at least some chance to recoup their development costs. It exempts certain rare-disease drugs entirely. And lawmakers limited the number of medicines subject to price controls each year — starting with 10 drugs in 2026, then 15 in both 2027 and 2028, and 20 more each subsequent year.

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