If there’s one axiom, we all know about Washington, D.C., is that it’s full of well-intentioned policies and unintended (read: harmful) consequences. A recent reminder of unintended policy consequences is the so-called Inflation Reduction Act (IRA). The IRA was passed in August 2022, and according to its champions in Congress and the White House, it was intended to reduce the federal government budget deficit, make investments in renewable energy, lower drug prices, and fight inflation.
Two years later, we’ve unfortunately re-learned that noble intentions don’t necessarily produce good policy. The IRA has failed to achieve its objectives in many ways. One significant problem involves the introduction of drug price controls, which take effect in 2026. Due to the IRA, the federal government now has wide-ranging authority to set the price of drugs through what’s known as the Medicare Drug Price Negotiation Program.
A recent analysis warns that these pricing provisions will likely lead to higher costs for millions of seniors and disabled Americans who rely on Medicare Part D. This shouldn’t come as a surprise – price controls simply don’t work, and when they’re implemented, someone will eventually have to pick up the tab. Nor should it be surprising that government spending doesn’t reduce inflation. History shows quite the opposite.
The first group of impacted drugs includes ten medicines that have been selected to have a “maximum fair price” (MFP) set under the IRA. In 2024, Medicare beneficiaries typically pay fixed copays for most of these drugs. For millions of these beneficiaries, artificially fixed-drug costs will slow their progression toward their Part D out-of-pocket limit, making them pay more in out-of-pocket costs. […]
— Read More: amgreatness.com
