CCAGW Urges Senators to Oppose Price Control Provisions in Must-Pass Legislation | Council For Citizens Against Government Waste

CCAGW Urges Senators to Oppose Price Control Provisions in Must-Pass Legislation

Letters to Officials

February 11, 2020 

United States Senate 
The Capitol 
Washington, D.C. 20510 

Dear Senator, 

A must-pass or fast-moving bill, like Medicare and Medicaid extenders, should not contain any onerous provisions that are supposedly designed to lower pharmaceutical costs. On behalf of the more than one million members and supporters of the Council for Citizens Against Government Waste (CCAGW), I ask that you oppose any price control, or similar mandate, that may be offered as an amendment to any must-pass bill.

S. 2543, The Prescription Drug Pricing Reduction Act, has been mistakenly referred to as a moderate, bipartisan alternative to H.R. 3, House Speaker Nancy Pelosi’s (D-Calif.) drug pricing legislation. But, S. 2543’s solutions to lower drug costs are taxes, price controls, or harmful mandates. These provisions will create more distortion in the marketplace and higher costs that will hurt innovation and provide fewer choices for patients. These bad ideas would drive the U.S. closer to a socialized healthcare system because it affirms similar policies that are found in Medicare for All, and farther away from a free-market healthcare system. 

CCAGW has previously opposed the following provisions, which are now being discussed as possible amendments to continuing resolution. I ask that you: 

· Oppose the 20 percent price control in the catastrophic phase in the Medicare redesign, found in Section 121 of S. 2543. While CCAGW agrees that American Action Forum’s proposal to reform Medicare is a sound plan that deserves serious consideration, we disagree that pharmaceutical manufacturers should have a mandated discount in any phase of Medicare Part D. Drug manufacturers are not insurers and a forced discount is a price control that distorts the marketplace structure of the plan. Insurers and pharmacy benefit managers should be carrying most of the risk, with as much negotiating power and formulary design control as possible, to drive discounts from drug manufacturers and pharmacies. 

· Oppose any inflationary rebate provisions for pharmaceuticals in Medicare Parts B and D, sometimes erroneously called subsidy controls, in S. 2543. These rebates are nothing more than price-fixing and would interfere with the private negotiation in Part D, ultimately hurting Medicare patients. 

· Oppose an international pricing index (IPI), or foreign reference pricing. An amendment was offered in the Finance Committee markup to prevent the administration from utilizing an IPI but failed in a tie vote. An IPI adopts foreign price controls, which have severely hurt biopharmaceutical research and development in Canada and Europe.

The U.S. pharmaceutical market has been greatly distorted, thanks to government interference. Large portions of prescription pharmaceuticals are under some form of price control scheme, from Medicaid rebates, to the VA prescription drug benefit, to the provider reimbursement formula in Medicare Part B, to the 340B drug discount program, to requiring a 70 percent discount in the Medicare Part D coverage gap or donut hole as a result of the Bipartisan Budget Act of 2018. 

If conservatives believe in free markets and competition, they should oppose policies that are utilized in foreign countries with socialized medicine and allow private-sector negotiation to continue to occur. 

All votes on imposing price controls on the pharmaceutical industry will be among those considered for CCAGW’s 2020 Congressional Ratings


Tom Schatz
President, CCAGW

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