Since Nancy Pelosi became House Speaker in 2007, Republicans have spent an incredible amount of time and energy pushing back against her progressive policy proposals. That's why it's odd that the GOP's newest drug pricing bill is a watered-down copy of one of Pelosi's worst ideas.
Speaker Pelosi recently introduced H.R. 3, a drug pricing bill that would install what Senate Majority Leader Mitch McConnell called "socialist price controls" on most Medicare and Medicaid prescriptions. H.R. 3 would cause the price of certain drugs to soar, reduce the availability of many prescriptions, and dry up investment in innovative, life-saving drugs.
Republicans on the Senate Finance Committee responded to Pelosi with their own, competing legislation. The GOP drug pricing plan would install an inflation penalty that functions, according to Sen. Pat Roberts (R-KS), as socialist "price controls" on Medicare medicines. And just like the House Democrats' drug pricing plan, the Republicans' version would cause the price of certain drugs to soar, reduce the availability of many prescriptions, and dry up investment in innovative, life-saving drugs.
There's not a dime's worth of difference between the Democrats' troubling drug pricing scheme and the Republican alternative.
Pelosi's H.R. 3 would cap the price of prescriptions at 120 percent of the average price of the drug in Australia, Canada, France, Germany, Japan, and the United Kingdom. Price controls on medicines have had devastating consequences in the countries Pelosi wants to emulate.
Of 220 new drugs launched from 2011 to 2017, 90 percent were available in the United States. Just two-thirds were available to patients in the UK, only half were offered in Canada and France, and a paltry one-third were available in Australia.
Medical innovation has also dried up in these countries. The portion of new medicines originating from the UK, France and Germany has been slashed in half over the past 40 years.
Unfortunately, the Senate Republicans' alternative drug pricing plan is plagued with many of the same problems as Pelosi's proposal.
Republicans call their price control scheme an "inflation penalty" but it functions the same as Pelosi's socialist price cap. Under the GOP bill, if a drug price increases beyond the rate of inflation, the manufacturer has to pay a fine to the federal government equal to that cost hike.
Senate Republicans also want to force drug manufacturers to pay 20 percent of seniors' prescription costs once an individual's out-of-pocket-costs reaches $3,100 annually.
The price caps, taxes, penalties and payments the House Democrats and Senate Republicans want won't do much to actually lower costs to patients, but they will almost certainly cause Americans to die. That's because these "solutions" all remove the incentive for drug manufacturers to invest money into R&D.
It costs an average of $2.6 billion to bring a new drug to market. Under both proposals being floated in Congress, manufacturers would find it almost impossible to recoup their investment in developing new medicines. Not only would incentives to create groundbreaking, life-saving medicines vanish, competition that lowers the price of drugs would dry up as well.
Senate Republicans should scrap their rip-off of the Democrats' prescription proposal and do more to differentiate themselves from Speaker Pelosi's big government drug pricing plan.
Drew Johnson is a senior fellow at the National Center for Public Policy Research.
