Roff: Medicare prescription price controls will hurt seniors


Peter Roff is former U.S. News and World Report contributing editor and UPI senior political writer now affiliated with several DC-based public policy organizations. He writes for numerous publications and appears regularly on international television talking about U.S. politics. You can reach him at and follow him on Twitter @TheRoffDraft.

The inflationary spiral that drove prices up during the first years of the Biden administration has ended. That’s the good news. The bad news is we’re still paying more for too many things even as real wages underwent a prolonged decline.

To help people buy more with less, Joe Biden appears to have embraced price controls.

That shouldn’t be a revelation. Buried inside the Inflation Reduction Act is a provision that created a pathway for the government to secure lower prices for certain prescription drugs covered under Medicare. It’s controversial. Many economists and the pharmaceutical industry say fewer quality-of-life-improving drugs will be produced because of it. Nonetheless, the Biden administration has continued to move towards its implementation.

Those who are old enough to remember the Nixon years know that government-imposed price controls don’t work. Seniors who are hoping the Biden initiative will reduce what they pay for the drugs they need are in for disappointment. Instead of alleviating their financial concerns, the administration’s scheme will add to them.

It doesn’t have to be that way. In a rational world, adopting a plan that will undoubtedly produce scarcity, higher prices (resulting from a new excise tax on certain targeted drugs), and lead Medicare to determine it should cover fewer rather than more prescription pharmaceuticals would be dismissed out-of-hand. Yet that’s what the president’s plan will do.

There are better ways. Under George W. Bush, America’s seniors benefited through the introduction of Medicare Part D, which allows them to pay for prescription drugs through private insurance purchased with government assistance. Most of the expense was borne by the new program, reducing the amount seniors needed to pay out-of-pocket to get their prescriptions filled.

It worked better than most analysts and economists projected it would. Biden, it seems, is ready to undo that progress and reverse direction through a program sold to the American people as one that merely authorizes the federal agency that oversees Medicare and Medicaid to “negotiate” on price with drug manufacturers.

That sounds reasonable. Who can be against negotiation as a means to resolve disputes? However, the process outlined in the Biden plan isn’t exactly what you find in the private sector. It’s actually quite different.

First, CMS – the Centers for Medicare and Medicaid Services – issues a list of ten drugs it’s targeting for price negotiations and then imposes a price cap on what it will pay for those drugs. The only “negotiation” occurs when the manufacturers are asked if they want to accept those caps or, as a penalty for refusing to accept the imposition of a newly-created excise tax instead.

That tax is an assessment imposed on sales of a particular drug until the tax hits 95 percent of the gross sales price of the drug in all markets. It is an onerous penalty. Additionally, the drug under review will be removed from the list of those covered under Part D. Unless you consider it fair to make someone “an offer they can’t refuse,” that’s not exactly a negotiation. There’s no give and take – just a chance to accept or reject the deal put on the table by the side that holds all the essential cards.

Here, though, is the key: none of that helps seniors. Instead, it harms them. Drugs they need will be subjected to price controls that will lead to scarcity, even rationing to maintain supplies, or they will be kicked out of Part D coverage and hit with a confiscatory tax. Ironically, this same scheme to fix prices would be illegal if the companies that make the drugs tried it.

The only ones who win in the proposed Biden scenario are the government bureaucrats who want to control vital aspects of our lives. Progressives like Bernie Sanders like it because they think it sticks it to the drug companies while forcing us all closer to a national health insurance program modeled on his “Medicare for All” idea. The rest of us, however, should be concerned.

The best way, the only way really to manage prices is through the free market. Medicare for All or any other arrangement that leaves the government in charge of healthcare and puts federal bureaucrats in between decisions that doctors and patients should make is a bad one.

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