“Pharmaceutical Innovation is Winning the War on COVID-19. Biden Shouldn’t Disarm.” |
By Doug Badger | Chicago Tribune, April 17, 2021
The Biden administration is launching what amounts to a federal assault against pharmaceutical innovation—innovation that led to the historic feat of producing vaccines against COVID-19 in record time.
President Biden would impose federal price controls on prescription medicines that could mean up to 100 fewer drugs entering the market over the next decade.
Imagine our society without COVID-19 vaccines. Had the U.S. been left only with strategies that public health experts call “non-pharmaceutical interventions” — lockdowns, school closures and mask mandates — the end of the pandemic would not be in sight.
The proposed Biden plan would set an “upper price limit” for cutting-edge medicines based on prices set by foreign governments. Those prices, however, are one reason that citizens of those countries lack access to cutting-edge drugs that Americans take for granted.
The federal government would “negotiate” prices below that upper limit. Manufacturers that refuse would incur an excise tax of up to 95% of the revenues it derived from that product in the preceding year—a punitive and confiscatory tax.
In its December 2019 report, the Council of Economic Advisors estimated this would reduce the pharmaceutical industry’s revenue by anywhere from $500 billion to $1 trillion over the next decade, resulting in a massive reduction in research budgets and as many as 100 fewer products over that period.
According to the CEA, Americans would be less healthy and less economically productive as a result. The $34.5 billion in annual savings that the federal government would realize from price controls would reduce annual economic output by $375 billion to $1 trillion, imposing a cost to society 10 to 30 times the federal savings.
The proposed price controls would choke off tens of billions of dollars of capital investments in new treatments, vaccines, and cures.
Thanks largely to the availability of COVID-19 vaccines, hospitalizations and deaths continue to plunge. The immunization effort is the fruit of decades of research by private entities on new vaccine technology. They were able to succeed because they had the capital to spend on research that generated no return through years of failure.
Pharmaceutical innovation is our most effective weapon against COVID-19 and other horrific diseases. The federal government shouldn’t disarm us.