The announcement today that inflation has hit 6.8%, the highest since 1982, puts a deep crimp in Senate plans to finish work on the big government give-away bill before Christmas.
Sen. Joe Manchin has repeatedly said he wants to press pause on the tax-and-spend Build Back Better bill, largely over his serious and very legitimate concerns about inflation. Pouring another $5,000 billion into an already inflated economy would be devastating to middle-income families struggling to make ends meet.
And today’s Wall Street Journal carries a commentary by University of Chicago Economist Casey Mulligan that highlights another hit to these same families. Mulligan, who served as chief economist at the White House Council of Economic Advisers, says “Biden Would Make Daycare Even More Expensive.”
Dr. Mulligan’s analysis shows that “while some of those who receive government subsidies may see reduced costs, millions of other working parents could see their child-care costs double. The new program would act like a $20,000 to $30,000 annual tax on middle-income families.”
And then there is the dramatic impact of the bill on all of our future health.
Dr. Tomas Philipson, also a University of Chicago economist and former chairman of the Council of Economic Advisers, finds that BBB will reduce revenues in the pharmaceutical industry by 12% through 2039, reducing research investments over that time by $663 billion.
What does that mean in terms of impact? This cut in R&D activity leads to 135 fewer new drugs, Dr. Philipson’s analysis shows. “This drop in new drugs is predicted to generate a loss of 331.5 million life years in the U.S.”
The repercussions for patients, especially the sickest patients, would be epic.
And there’s more. AEI Scholar Kirsten Axelsen estimates how many fewer clinical trials there would be for HIV patients alone if the BBB cuts were enacted.
There have been significant advances in treatment for HIV by finding better ways to use existing drugs. In her report, Kirsten estimates that, as a result of BBB, there would be 537 to 551 fewer HIV clinical trials relative to what would have otherwise occurred in 2021-2035. This is just the tip of the iceberg, of course.
Drying up the number of clinical trials is a shocking, but totally logical, consequence of cutting so much from research and development funds and nearly erasing the incentive for companies to test alternative uses for their drugs.
There are currently 1,361 medicines in development for cancer, 580 for childhood diseases, 138 for mental illness and 167 for diabetes—just for starters. Do we really want to slam on the breaks to this research that patients are so desperately waiting for?
Heritage Scholar Ed Haislmaier analyzed how BBB’s attempt to set a government-mandated price ceiling for prescription drugs would eliminate any incentive for drugmakers to agree to a price that is anything other than just slightly below that ceiling price.
And then there is the harm to states: Brian Blase, president of the newly founded Paragon Health Institute, finds that BBB would target states that didn’t expand Medicaid with big cuts to federal funding for their safety net hospitals. In his new paper, he says the bill would exacerbate the failures of Medicaid’s disproportionate share hospital (DSH) program, ultimately failing low-income individuals and the uninsured.
Chris Holt over at the American Action Forum also writes about this issue today. The Supreme Court in 2012 said the Obamacare mandate that states expand Medicaid was “a gun to the head” and ruled that expansion had to be voluntary. “Ever since, supporters of Medicaid expansion have struggled to entice, prod, or force reluctant states to go along, but to date 12 states still have not expanded.” Now the Democrats are playing hardball again with provisions in BBB that would cut payments to DSH hospitals in non-expansion states by 12.5 percent starting in fiscal year 2023, harming the most vulnerable.
Here is my contribution to helping to educate the debate with a piece I wrote on Wednesday for Forbes, “Don’t Destroy Future Drug Development.”
And finally, some good news. We have talked in this space about the vitally important private-public sector partnership that was Operation Warp Speed, directed by our friend Paul Mango who was then deputy chief of staff at HHS under Secretary Alex Azar. Amazon has posted a pre-order page this week for his book so you can be first to get your copy of Warp Speed: Inside the Operation That Beat COVID, the Critics, and the Odds. It will be released in March but you can order your copy now! Paul chronicles the conception, development, and implementation of the most successful public-private partnership since World War II from a behind-the-scenes perspective. This is the way government should work