Biden-Era Law That Created Medicare Drug Price Controls Could Hike Up Prices, Analysts Warn

DAILY CALLER

Medicare’s drug price controls could restrict Americans’ ability to access care and potentially drive up costs in the long term, according to analysts.

The Inflation Reduction Act (IRA), signed into law by then-President Joe Biden in August 2022, authorized the U.S. federal government to negotiate prices for certain high-cost prescription drugs covered by Medicare through the Medicare Drug Price Negotiation Program. While congressional Democrats previously claimed the IRA would help bring down healthcare prices, analysts warned the Daily Caller News Foundation that such price controls might limit some patients’ access to certain prescription medicines and impose cost burdens on Americans.

“Despite the IRA’s drug price controls being sold as a boon to consumers, the policy doesn’t actually solve any of the health-policy problems people consider most important to them,” Director of Health Policy at Americans for Tax Reform Isabelle Marchese told the DCNF. “Price controls don’t eliminate cost or risk; they simply reallocate them in less efficient, less transparent ways. To protect their income, insurers and PBMs have, naturally, responded by tightening their utilization-management tools — prior authorization, quantity limits, formulary exclusions, and/or preferred-status restrictions — on the drugs whose list or net prices have been artificially suppressed.”

“These results are inevitable consequences of price controls,” Marchese continued. “They never make the underlying costs or risks disappear, they only force someone else (often, patients) to absorb them through more red tape, delayed care, and restricted access.”

Traditionally, a price control refers to a mandate that requires a business to reduce the price of its product to what the government deems an acceptable level, according to Americans for Prosperity. Throughout history, socialist countries have often imposed such controls.Marchese went on to say that such price controls may further reduce patient access to select prescription drugs in the future.

“Not only will these price controls cause drug price hikes and limit access in the near future, but the long-term effects of this policy are even more devastating,” she said. “In the near term, companies will raise launch prices on new drugs, accelerate price increases on non-selected products, and shift costs onto the commercial market that covers the majority of Americans under 65. In the long term, many of the high-risk, high-reward research projects that made the U.S. the world leader in biomedical innovation will never be started.”

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