https://issuesinsights.com/2023/06/28/senate-democrats-take-one-more-step-toward-socialized-medicine/
It’s been less than a year since Democrats enacted the Inflation Reduction Act, which gives Medicare the power to set the prices of certain medicines.
Those price controls have yet to go into effect. But Democrats already want more. They’ve introduced new legislation that would amp up those price controls — and even permit the government to refuse to cover drugs in order to drive a harder bargain with pharmaceutical companies.
As for the patients who would benefit from those drugs — or may even need them to stay alive? They may end up being collateral damage.
The Democrats’ new price control gambit is the SMART Prices Act, introduced by Sens. Amy Klobuchar, D-Minn., Peter Welch, D-Vt., and 23 of their colleagues. They say their bill would “build on” the IRA.
That law, which President Biden signed last August, subjects 10 medicines to price controls under Medicare in January 2026. The government will set the prices for 15 more in 2027, another 15 in 2028, and 20 more per year in 2029 and beyond.
The SMART Prices Act would take things even further. It would empower Medicare to set prices for 20 drugs in 2026, instead of the current 10 under the IRA. In 2027, that number would jump to 40 — many more than the IRA stipulated.
The new bill would also subject medicines to price controls five years after approval by the Food and Drug Administration. That’s up to eight years quicker than under the IRA and significantly sooner than when generic or biosimilar competitors can enter the market.
This provision would gut the generics industry. Generic firms face substantial upfront costs. They must create medicines that are bioequivalent to the innovative branded drugs they’re copying. And they have to build facilities in which to manufacture them.
They recapture those investments by underpricing their wares relative to branded drugs and capturing a small margin on each sale. Patients, of course, benefit from those lower prices.
But if Washington sets a rock-bottom price on a brand-name drug, there will be no incentive for a generics manufacturer to enter the market.
That’s problematic for several reasons. For starters, the government’s mandated price may not be as low as a competitive market could generate. So patients may end up paying more than they should.