(TheRedWire.com) – Debates in Congress have been ongoing about whether to cap the prices on prescription drugs. The Democrats’ reconciliation bill, or the Build Back Better Act, includes a provision allowing the government to set drug prices.
Healthcare leaders argue against such a move. They think it’s an overreach that will curb innovation within the industry at a cost to public health.
The University of Chicago Study
On November 29, the University of Chicago released a study showing the effects of price caps. The report showed a significant impact on research and development (R&D), which would spread issues throughout the healthcare industry.
The information showed that a 1% price reduction equals a 1.5% loss for R&D. With the Build Back Better plan suggesting a 12% reduction in pricing, the projections from the university are a loss of 18.5% or $663 billion from now until 2039 for the industry to conduct research and develop new drugs.
As a result of the losses, the proposed law would result in 135 fewer new drugs hitting the market and a higher cost for healthcare for everyone. They project a 3.7% increase in the overall cost of medical services because of the lack of new drugs.
The team also estimated a loss of 331.5 million life years in the US. To put that into perspective, COVID-19, as of the date of the report, resulted in 10.7 million life years lost.
The current direction Congress is taking is alarming in light of these projections.
Americans for Prosperity/YouGov Poll
The healthcare industry is not the only one speaking out. Americans aren’t happy about the potential impact of the Build Back Better prescription drug policies.
An August poll from Americans for Prosperity/YouGov showed 68% of respondents felt cutting red tape and allowing more competition would best reduce costs. Only 32% agreed to the type of oversight the legislation wants to implement. Also, 59% disagreed with the government setting drug prices under the plan.
One idea to combat the potential issues with the Build Back Better prescription drug provisions is for legislators to look for a different approach using consumer choice and competition to help lower costs instead of using government overreach to force the industry into compliance.
Increasing competition will enable the industry to give people more generic options, which are more affordable. The current FDA process to get approval is expensive and slow, so speeding it up and reducing the costs can enable drug manufacturers to increase innovation.
While capping the price of medications may seem like a good idea on the surface, digging deeper reveals it may be a horrible mistake. Can Americans afford the current plan, or will it push healthcare out of many people’s budgets?
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