History has shown us how government-imposed prices end badly for consumers. We rarely see the intended results last for long, while their side effects have enormous consequences. President Donald Trump is now discussing foreign reference pricing, paying little mind to a chorus of economic experts, innovators, and seniors who are concerned that those policies will do more harm than good. Ultimately, the more that the administration and Congress layer price controls on our healthcare system, the more they risk the health and well-being of seniors.
In recent days, the administration has discussed the “most favored nation” policy, which will be far-reaching and damaging to patient access and competition in the healthcare market. With this proposal, drug prices would become tied to those in other nations, such as Canada and European countries. The issue here is that many of those nations have single-payer systems where the government single-handedly determines the drug prices. Moreover, many of these countries use discriminatory “value” standards that devalue newer medicines and discriminate against the elderly and people with disabilities. Any efforts to tie our drug prices to these nations will only effectively import their pricing mechanisms, and the societal values and harms that come with them, into our market.
This proposal kicks people, especially seniors, when they are already down after enduring the side effects of the government’s attempt to negotiate drug prices in Medicare. Former President Joe Biden’s misnamed Inflation Reduction Act, in short, has been a disaster, with seniors facing higher out-of-pocket costs, higher premiums, and reduced access. As I’ve written before, the law essentially “broke” Medicare Part D.
What has been billed as a good-faith negotiation between the government and innovators is nothing more than one party (the federal government) strong-arming another into setting its prices at a certain level. As a direct result, innovators have already begun to shift investment away from the development of certain classes of drugs that seniors disproportionately use. In fact, the Inflation Reduction Act will result in an estimated 135 fewer medicines introduced over the next 10 years. This program needs to be rolled back, not expanded. Yet that’s exactly what the administration and Congress are proposing with the most favored nation policy.
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As the president of an organization that advocates for policies that promote senior well-being, I urge policymakers to recognize the negative implications of any healthcare price controls, such as the Medicare Drug Price Negotiation Program and foreign reference pricing proposals, before they can wreak further havoc on senior healthcare.
Price controls are bad for consumers. When it comes to healthcare and seniors, lives are on the line, and the stakes are even higher. Policymakers should instead rely on trade and diplomacy and return to our foundational free-market values to ensure all senior patients have access to breakthrough treatments. We should learn from the past and avoid any price-setting policies that will worsen American healthcare.
Mark Gibbons is president and CEO of RetireSafe.