Biden's Affordable Prescription Drug Plan a Nonstarter

The arc of history is long, and apparently it bends toward confusion.

Flying in the U.S. used to be luxurious. Watch an episode of Mad Men where they fly: Men are in suits and ties, women in nice dresses. Some airlines even had piano bars — in coach!

It’s not as glamorous today; what’s luxurious is that most people can do it. In 1977, only 25% of adults Americans took a trip by air, but by 2017 the rate had doubled. What happened was the 1978 Airline Deregulation Act.

Free from the shackles of government-imposed price restrictions, airlines could charge less for tickets, and ergo more people fly now. (There’s a great video that summarizes the whole thing here.)

It’s not surprising that deregulation worked; it’s surprising that Democrats — notably President Jimmy Carter and Massachussetts Sen. Ted Kennedy — were the ones behind it.

Fast-forward to today and President Biden is taking the opposite approach on prescription drugs.

The Biden administration has long wanted to enforce price control on prescription drugs. Last week, it released a list of the first 10 drugs on which they’ll impose such controls via Medicare negotiations. This first batch includes medicines to help fight heart failure, blood clots, diabetes and other afflictions.

Wide authority to do this comes from the oh so cleverly titled Inflation Reduction Act, allowing the government to directly broker with drug manufacturers for the 65 million people on Medicare.

“While the pharmaceutical industry makes record profits, millions of Americans are forced to choose between paying for medications they need to live or paying for food, rent and other basic necessities," Biden said in a statement. "Those days are ending."

The goal is obvious: leading into the 2024 election, Democrats want to be able to say they’re helping ordinary folks. Dangling the carrot of lower drug costs will help distract from Biden’s record inflation and crippling energy policy, which has made it increasingly difficult to pay for anything.

Price controls are always short-sighted (alas, so are bi-annual elections). Anything that undermines the financial incentives of prescription medicine cripples the research and development of the future. Because today’s drugs take so long to get to market, research companies need to know they can expect a reasonable return on investment (ROI) or else they will spend their resources on something else — like different flavors of Nitro Pepsi.

While polling shows that Medicare drug price negotiation has casual popularity, one study shows that the idea is deeply troubling to many. It found that 40% oppose price controls while only 33% favor them.

Everyone wants cheaper medicine, of course, but not at the expense of the doctor-patient decision-making process. There is overwhelming consensus (67%) that any savings in Medicare should be re-invested into improving Medicare services.

No one wants to see Democrats cut costs on Medicare so they can throw money at their pet climate projects — which is exactly what they’ve been doing.

Again, the goal is to have something to tout at campaign stops over the next 14 months, a banner about “Saving seniors money!” here, a direct mailer about how Republicans want to steal seniors benefits there. But any negotiations pursuant to this bill won’t take effect until 2026, and the real damage won’t be done until long after the Biden administration is gone.

We already know how this will turn out: badly. Fortune favors deregulators, not price-fixers. That’s why he voted for the airline bill in 1978. The arc of history is long, and in Joe Biden’s case it has absolutely bent toward confusion.