We Urge Congress to Oppose Grassley-Wyden Prescription Drug Price-Fixing

U.S. Senator Chuck Grassley (R-Iowa) is making a big push for new cosponsors of the Prescription Drug Pricing Reduction Act (PDPRA, a.k.a. the Grassley-Wyden Prescription Drug Bill), building off of President Trump’s mention of reducing prescription drug prices during his 2020 State of the Union address. Although Sen. Grassley has had trouble getting Republican Cosponsors in past, the State of the Union address has emboldened his staff to recirculate a recruitment letter, netting Sens. McSally (R-Arizona) and bringing the bill up to almost a dozen Republican cosponsors.

What is troubling is that in his efforts, Sen. Grassley has ensnared otherwise right-of-center policymakers into supporting a key pillar of the Medicare for All playbook—government-imposed price controls. Whether it is called price-fixing, rate setting, subsidy capping, or inflation capping, government price controls have sneaked into healthcare reform plans from across the political spectrum.

In this case, the PDPRA includes an inflationary rebate penalty that imposes a price-fixing mechanism into the Medicare Part D system by forcing manufacturers to pay a 100 percent fee if the list price of a drug increases faster than inflation. The revenue generated from this penalty would go straight to the government and, therefore, would do nothing directly to reduce drug costs for consumers.

Good fiscal conservatives have always opposed government price controls in healthcare and prescription drugs, and for good reason. Price controls lead directly to scarcity, since it involves the government forcing a provider to sell below the market price, and why would a provider continue to produce to market capacity under those circumstances? It wouldn’t make any sense to do so.

In turn, the scarcity means that the government gets to ration who gets the prescription drugs that are produced. Before long, the government is telling one person he can have the price-controlled medicine that day and tells another he cannot. It’s worth mentioning: Medicine can only be affordable if it is available to purchase in the first place. Cheap, unavailable drugs are useless.

Therefore, we urge Senate Republicans not to sign on as cosponsors of the PDPRA price-fixing scheme and urge Senate Majority Leader Mitch McConnell not to allow a floor vote on the legislation.