Drug prices may be too high, but government intervention isn't the answer, according to a new report from the White House Council of Economic Advisers.
The advisers slammed Rep. Nancy Pelosi's plan to artificially cut the costs of prescription drugs. They argued that that plan would lower crucial revenue that drug companies use to research and develop new medicine. That, in turn, could lower life expectancy nationwide by up to four months and stop 50-100 new drugs from entering the market over 10 years.
As the Washington Free Beacon reports:
The Democrats' bill would require the Centers for Medicare and Medicaid Services to negotiate prescription drug prices directly with pharmaceutical firms, something they are prohibited from doing by federal law. Prices could not exceed either (a) 120 percent of the average cost in Australia, Canada, France, Germany, Japan, and the United Kingdom, or (b) where that information is not available, 85 percent of the current price. The prices would also be offered to private insurers; noncompliant firms would face an excise tax of up to 95 percent on their products.
The problem, the CEA said, is that lowered prices mean lower revenues, which in turn means less money for research and development. The nonpartisan Congressional Budget Office estimates that the bill would reduce revenues by $500 billion to $1 trillion over 10 years. The CBO estimates that would mean 8 to 15 fewer drugs in that time period. Reducing drug innovation in that way "would have substantial negative effects on Americans' health" and cause a four-month decline in life expectancy and $375 billion and $1 trillion in lost economic value, according to the CBO. This would swamp H.R. 3's predicted cost-savings of $34.5 billion over a decade.The White House's top economic advisers said the CBO was conservative in calculating the costs of such caps. The CEA estimates that, at a cost of $2 billion per new drug, the bill could mean 50 to 100 fewer drugs over 10 years. That would mean losing roughly a third of the total new drugs expected to come to market.
The CEA report sums it up like this: "Heavy-handed government intervention may reduce drug prices in the short term, but these savings are not worth the long-term cost of American patients losing access to new lifesaving treatments."
When the federal government steps in, problems go from bad to worse. Washington, D.C., is too big, too corrupt, and too incompetent to solve an issue as complex and important as the price of drugs. Their "solutions" will do nothing but result in unintended consequences that make life harder for the American people.
We need to get the feds out of our daily lives, but they won't leave on their own. We must force them out, and the only way to do that is with a Convention of States.
An Article V Convention of States is called and controlled by the states and has the power to propose constitutional amendments. These amendments can limit the power, scope, and jurisdiction of the federal government, eliminate useless and overreaching government agencies, and restore decision-making power to We the People.
Nancy Pelosi can't solve our problems. Only we can do that, and only a Convention of States can give us that power.
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