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Dozens of Economists and Health Experts Urge Biden to Drop Drug Tax


A joint letter to President Biden and HHS Secretary Xavier Becerra has been issued by dozens of top economists and healthcare experts, urging the Biden Administration to work with Congress and ditch the excise tax on prescription drugs. The letter is signed by Nobel Laureate Vernon Smith, academic economists Richard Vedder, Barry Keating, Michael Munger, and more. In the letter, “Scrap the Punitive, Unworkable, and Indefensible Excise Tax on Prescription Drugs,” the experts write that an excise tax that passed in the Inflation Reduction Act is unworkable, punitive, and harms both taxpayers and patients.

As the experts write,

It is axiomatic that taxing a product or service at exorbitant rates tends to reduce its availability. The very existence of a 95 percent excise tax could therefore lead to shortages in the prescription drugs that patients need, as well as less innovation toward future cures as manufacturers are deterred from engaging in R&D that could carry a new 95 percent premium. Taxpayers could no longer count on as many future drug breakthroughs to bend the cost curve of more expensive treatments such as surgeries and hospital stays in government healthcare programs. The policy goal should be to encourage life-saving treatments that benefit seniors in Medicare, and ultimately, all taxpayers. This tax scheme will do the opposite.

The tax, contained in Section 5000D of the Inflation Reduction Act, is also under several legal challenges. It’s so unworkable that the Joint Committee on Taxation (JCT) estimates that it will raise $0 in revenue over its lifespan - because they assume it’s so unworkable that it will never actually take effect.

Congress and President Biden should move to repeal or substantially modify the section 5000D excise tax - for the good of patients and taxpayers.

For more information on this coalition letter, please contact Kevin Glass, NTU Vice President of Communications, at 703-299-8670 or at