Eighty-eight days ahead of the midterm elections, Democrats passed, without a single Republican vote, a 730-page spending bill aimed at making good on unkept promises to a demoralized progressive base. At $737 billion in new revenue, the bill weighs in at just over $1 billion/page.
Spending that much money can check off a long wish list for the left in an election year. This bill certainly does that, with subsidies for everything from solar panels to vaccinations. As foolhardy as it may be to grow government in an economic downturn simply as a play for votes, the worst part of the bill is completely unnecessary even for the sake of vote harvesting.
For decades, Democrats have threatened to stick it to Big Pharma by implementing price controls for certain drugs. But rational adults from both parties have always been able to convince anti-pharma activists that executing that golden goose will also result in death and suffering for an untold number of sick people. Now, it is done. Price-setting provisions for pharmaceuticals in this bill effectively begin to crimp off the U.S. drug innovation pipeline. For 75 years, the United States led the world in bringing miracle cures to save countless lives and alleviate human suffering.
Subsidies in the bill that were designed to help middle-income people buy health insurance during the pandemic were continued. Democrats on the ballot would certainly have paid a price for 13 million people being hit with premium increases just weeks before the election. But congressional leaders could have passed this and other popular goodies without passing drug price controls. Senate talking points on the bill mention health insurance subsidies last, almost as an afterthought, below punishing the health care industry because they “rake in huge profits and negotiate secret discounts and agreements.”
In an August 4 letter to legislative leaders, the Congressional Budget Office warned: “The inflation-rebate and negotiation provisions would increase the launch prices for drugs that are not yet on the market relative to what such prices would be otherwise.”
The University of Chicago’s Freidman Institute found that price controls within the first version of this bill (HR3) would mean “254 fewer new drug approvals.” The next breakthrough for Alzheimer’s or cancer could have been one of those drugs. Price controls freeze research and development, and doing so in the United States, the wellspring of medical innovation for the world, is inexplicable.
A recent Penn-Wharton Budget Model analysis of the Inflation Reduction Act found that the effect on inflation will be “not statistically different from zero.” Unfortunately, we now live in an upside-down political world where everyone can pretty much agree that the Inflation Reduction Act will not lower inflation. But as cynical as things have gotten, we have never crossed over into self-harm as we now have.
The disastrous impact of research-killing price controls will take years to show up. For this cheap shot talking point, Democrats will save no money, and gain no votes.