CCAGW Urges Minnesota House Commerce Committee to Oppose HF 294 | Council For Citizens Against Government Waste

CCAGW Urges Minnesota House Commerce Committee to Oppose HF 294

State Action

February 13, 2023

Minnesota House of Representatives
Commerce Finance and Policy Committee
100 Rev. Dr. Martin Luther King Jr. Blvd.
St. Paul, MN 55155

Dear Representative,

On Monday February 13, 2023, the Commerce Finance and Policy Committee will hold a hearing on HF 294.  This bill will create price controls that distort the medical marketplace and impose burdensome requirements on prescription drug manufacturers that will stifle innovation, while doing nothing to lower drug prices.  On behalf of the 32,459 members and supporters of the Council for Citizens Against Government Waste (CCAGW) in Minnesota, I urge you to vote against HF 294.

Price controls throughout history have led to shortages and rationing in every industry on which they are imposed.  HF 294 establishes a pricing scheme that will distort the medical marketplace and lead to fewer future cures.  The bill prohibits a drug manufacturer with a drug whose wholesale acquisition cost (WAC) is $100 or more for a 30-day supply or course of treatment or less than 30 days from increasing the WAC for the next calendar year.  The bill language is highly problematic and as written could disallow a biopharmaceutical manufacturer from ever increasing prices.  The long-lasting effects of these price controls will hinder future research and development.  Government intervention into the marketplace isn’t the solution.  The Minnesota legislature should aim to create an environment that spurs rather than hinders innovation.

On average, it takes 10 to 15 years and $2.6 billion to bring a drug from lab to market.  Instituting price controls would only exacerbate this costly endeavor by removing incentives for investing in pharmaceutical research and development.  A simulation model created by the National Bureau of Economic Research explored the impact of price controls on the U.S. pharmaceutical market.  They estimated that cutting prices by 40 to 50 percent in the U.S. will lead to between 30 to 60 percent fewer R&D projects being undertaken (in early-stage development).  The lasting effects of price controls on research and development will create an invisible graveyard of patients who will never have access to a live-saving medicine because it won’t ever be developed. 

The Minnesota Department of Health has yet to publish reports or make public information required by the 2020 Minnesota Drug Price Transparency Act.  HF 294 is therefore premature in requiring additional transparency information and should be rejected for this reason as well.  One way to lower prices in Minnesota would be for the state legislators to ask their U.S. congressional delegation to continue to hold the FDA’s feet to the fire to make sure the backlog of generic drugs awaiting approval can be cleared.  This would be a far more effective way to help bring down the price of prescription drugs than to pass this harmful and counterproductive legislation.  Again, I urge you to oppose HF 294.

Tom Schatz
President, CCAGW

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