When it comes to reducing the price of prescription drugs, particularly insulin, the past several months have provided a study in contrasts. Even as the private market comes up with innovative solutions to lower prices for consumers, the Left remains fixated on a one-size-fits-all, government-dominated system of price controls.
The latest example of this effort comes in the form of legislation from Sens. Jeanne Shaheen (D-NH) and Susan Collins (R-ME), which Majority Leader Chuck Schumer (D-NY) said he will bring to the Senate floor in the coming weeks. The bill would create a new regime whereby manufacturers who “voluntarily” agree to cap the price of insulin would receive preferential advantages. Specifically, insurers and employers could not demand rebates from drug companies for these “certified” insulin products, and could not charge patients more than $35 a month in co-payments.
This drug pricing scheme, like most other plans, comes with good intentions. But “voluntary” price controls didn’t stop inflation in the 1970s, and wouldn’t work now. And as it happens, the private sector has already come up with better solutions that would remedy the problems the Shaheen-Collins bill seeks to address.
As I noted several months ago, a consortium of private hospitals has banded together in an effort to manufacture generic insulin. Once its factory gets up-and-running in 2024, this non-profit consortium will produce insulin for an estimated $30 a vial — at least 75% lower than the current cost.
These types of efforts by the private sector — Mark Cuban’s Cost Plus Drugs initiative is another — will work to help bring down drug prices. In both cases, the efforts look to increase the manufacture of cheap, effective, generic drugs currently produced by a small number of companies. By increasing competition, Americans will pay lower prices at the pharmaceutical counter — without the massive new bureaucracy or “certification” scheme contemplated by the Shaheen-Collins legislation.
Lawmakers should bear these results in mind as Democrats attempt to resurrect their tax-and-spend legislation for a vote later this summer. That bill would demand pharmaceutical companies “negotiate” with the federal government — a “negotiation” with pre-determined outcomes, with prices set for prescription drugs. Companies that fail to comply will get assessed a 95% tax on their revenues, which the Congressional Budget Office said could lead companies to stop selling some of their products in the United States entirely.
Using government price controls to muscle down the cost of prescription drugs sounds appealing, but American patients would pay a severe price. The resulting cuts to research and development will result in countless life-saving drugs not being developed — by one estimate, as many as 100 fewer drugs in the first decade alone.
Everyone wants lower prices — for insulin, prescription drugs as a whole, and the many other goods whose soaring costs have affected Americans’ lives. But at a time when the private sector is working to create solutions, more big-government programs will only undermine those creative efforts — while hurting the lives of future patients, who will not get to benefit from new pharmaceutical innovation.
This year alone, we’ve seen how emerging new efforts can help struggling families afford the drugs they need. Let’s not ruin this progress by setting teams of Washington bureaucrats to undermine them.