National Taxpayers Union President Pete Sepp (NTU) on Thursday commended the White House for elements of its bold “Great Healthcare Plan” to lower health care costs by promoting increased transparency, competition, and choice for patients, while cautioning that the plan’s proposed foreign-based price controls on lifesaving medicines would work against those laudable aims.
“The Great Healthcare Plan’s requirement for more price transparency among Medicare and Medicaid providers is a practical step in the right direction for protecting both patients and taxpayers from runaway health care spending. Likewise, reforms targeting the opaque pricing arrangements of pharmacy benefit managers (PBMs) are urgently needed.
“Given that roughly 80% of the market is controlled by just three companies, their outsized market power raises drug and insurance costs. Finally, federal subsidies to insurance companies have too often acted to inflate premiums and reduce accountability in the marketplace. Allowing those funds to be redirected so that individuals can purchase coverage directly will reinvigorate competition for health care dollars and encourage more prudent spending of those dollars.
“At the same time, the plan’s focus on codifying Most-Favored-Nation (MFN) drug pricing is concerning. MFN links the prices for U.S. drugs to the artificially low rates that other countries pay, many of which have socialized medicine systems.
“Price controls will invariably lower incentives for research and development and result in a lower supply of new treatments for patients. While government-mandated price controls may appear to lower health care spending in the short-term, restricting the pipeline of innovative drugs will leave patients sicker for longer, only increasing the medical expenditures that they—and taxpayers—must shoulder in the long-run.”
As an NTU-organized letter from more than 150 economists warned:
Implementing a reference pricing system in the United States would create price controls that bring with them the same types of harms these policies have caused in other countries . . . Ultimately, patients will suffer as cures are delayed or entirely undeveloped, while taxpayers will be denied potential savings from drugs that could obviate more expensive treatments in government healthcare programs, and the investment of capital in development of new medicines.
“President Trump has already negotiated price reductions in key prescription drugs from numerous companies, including two more in the past two weeks. The White House can, and should, celebrate these patiently negotiated wins and avoid a one-size-fits-all policy that could erode one of America’s strongest economic and national security assets: a prescription drug market that is second to none in balancing innovation and access.
“Several parts of the Great Healthcare Plan offer tremendous hope to patients and taxpayers; NTU looks forward to working with the White House and Congress to make it even greater.”
National Taxpayers Union is the only free-market organization for taxpayers that unites effective advocacy with useful research about how to limit taxes, spending, and regulation at every level and branch of government—state, federal, administrative, and judicial.