OPINION:
Vice President Kamala Harris is mocking former President Donald Trump’s remark in their debate that he has “concepts of a plan” to improve health care. Committing to a repeal of the Inflation Reduction Act would be a wise response, focusing on its tool to impose price controls on prescription drugs, which guarantees costs will skyrocket.
Americans are already suffering from that law’s spending spree, sending prices on food and energy into orbit. In a report last year, Sen. Edward Markey, Massachusetts Democrat, and Rep. Alexandria Ocasio-Cortez, New York Democrat, acknowledged that the Green New Deal aspects of the legislation alone will cost $1.2 trillion in its first decade, over three times the original projection of $369 billion.
Mr. Biden pitched the Inflation Reduction Act as delivering lower negotiated prices, but with a gun pressed to your temple, its negotiation under duress. Expect it to raise the price of pills, potions and powders instead. It empowers the White House to impose a 95% excise tax penalty on medicines priced over figures the government pulls out of thin air — a cost passed on to consumers.
The act ignores the law of supply and demand as well as the chilling effect on investments into discovering the cures of tomorrow. It empowers the secretary of health and human services to consider the cost of research and development, production and getting approval from the Food and Drug Administration. But as a political appointee, the secretary’s only concern will be what plays in Peoria.
Proof that politics more than prescriptions is top of mind is President Biden’s boastful sound bite about reducing drug costs by 38% to 79% after the first negotiations in August. The figures are impossible to check. Medicare — meaning the administration — keeps what it pays for pharmaceuticals secret.
Mr. Biden told the nation, “We finally beat Big Pharma,” but the pharmaceutical industry has conquered many diseases, syndromes and afflictions, a far nobler accomplishment. Regardless, Mr. Biden’s will be the first of many disingenuous victory laps if the Inflation Reduction Act isn’t repealed.
Further muddling the picture is that drugmakers will have incentive to inflate prices so they have something to give away in negotiations. “List price,” Ross Margulies, a law partner at Manatt Health, told The Hill in August, “matters in very, very few circumstances,” so the number is easy to goose.
In the Hill story, Bailey Reavis of the consumer health nonprofit Families USA said that while “there are instances that Medicare could be paying list price, it’s unlikely that it was on any of the 10 drugs negotiated” by the Biden-Harris administration. It’s a rigged game using our money and health.
The price controls will result in higher costs for those with private prescription plans or who pay out of pocket. Politicians would go along because they could tout larger Medicare savings in campaign ads. Meanwhile, everybody in need of lifesaving and life-improving medications will pay more — with fewer of them available.
An indication that delivering rosy headlines rather than reducing drug prices will be the Biden-Harris administration’s top concern is that Health and Human Services Secretary Xavier Becerra has no medical background. He’s a lawyer and a politician. That skill set doesn’t translate to health care.
Just as the Inflation Reduction Act delivered the opposite of what its name promises, price controls only send costs upward. It’s a lesson America learned in the early 1970s, when President Richard Nixon used price-capping powers given to him by a Democratic Congress that figured he’d never pull the trigger, creating an issue to use against him.
Instead, Nixon decided to reap the political benefits. “I am today,” he told the nation on Aug. 15, 1971, “ordering a freeze on all prices and wages throughout the United States.”
After a three-month trial period, a Pay Board and a Price Commission, government bureaucrats would consider lifting the limits.
Nixon won a 49-state landslide, but a recession followed the price controls as day follows night. The term stagflation was coined for the combination of high unemployment and inflation. The inflation monster sunk its teeth into Americans and held on for a decade.
Only President Ronald Reagan’s economic reforms, which took the government’s boot off the free market’s neck, restored balance and soothed the pain. Venezuela is a more recent example. The socialist regime implemented price controls in 2003 and has kept expanding them ever since. In April of this year, food inflation stood at 57.6% over April 2023.
Price controls are politically popular but practical poison. If Ms. Harris demands more than concepts from Mr. Trump for health care, he ought to give her one: repealing the Inflation Reduction Act. It’s not only the right prescription for drug costs and the economy overall. It will remind voters that the Biden-Harris administration promises savings and delivers only sound bites.
• Dean Karayanis is content producer for “The Clay Travis and Buck Sexton Show,” a former staffer to Rush Limbaugh and host of “History Author Show” on iHeartRadio.
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