This morning, House Speaker Nancy Pelosi made the finishing touches on her sweeping socialist drug pricing proposal known as the Drug Price Negotiation Act (H.R. 3). Although CIFE agrees that we should focus on the cost of American health care in the form of prescription drugs, Pelosi’s plan raises serious concerns for the free market principles we stand for.
This plan, which was just officially released earlier today would base U.S. drug prices on those set by foreign governments. The HHS Secretary would be granted power to “negotiate” with drug manufacturers to artificially bring down the price of up to 250 drugs per year. If a manufacturer refuses to comply with this coercive price control scheme, they would incur severe penalty in the form of an excise tax equal to 65% of the manufacturer’s annual gross sales, increasing by 10 percentage points every quarter of noncompliance to as much as 95%.
Additionally, the Drug Price Negotiation Act would impose inflationary rebates on all Medicare Part B and Part D drugs for price increases since 2016, forcing manufacturers to pay the entire price back to the Treasury. This inflationary rebate mirrors elements of the socialist Senate Finance drug pricing package. The Wyden-Grassley socialist mind-meld will do nothing to directly help seniors and will instead create severe market distortions.
As all 24 House Energy & Commerce Republicans note, Speaker Pelosi is pushing this socialist proposal to appease her most extreme members by, “putting politics before progress.” Adopting foreign price controls, inflationary rebates, and excise taxes would destroy American medical innovation and severely limit drug research and development. CIFE feels that neither of these plans are beneficial to Americans and that much like the recent Senate Finance Drug Pricing package, H.R. 3 is definitely not the solution to lowering drug prices.