Pelosi’s prescription drug ‘negotiations’ would harm Americans and benefit China, Russia


In the 1980s, European investment in drug research was 24 percent higher than in the United States. But then, European officials decided to impose socialist price controls. Today, European investment in drug research is 40 percent lower than American investment is.

What has this meant on a practical level?

  • First, price controls have resulted in far fewer breakthrough drugs being available to Europeans than to Americans. It is the major reason why the survival rates for cancer and other chronic illnesses are higher in the United States than in Europe.
  • Second, it is also likely part of the reason that drug research industries have sprouted and thrived in “pharmerging” countries, including China, India, Thailand, Brazil, the Philippines, and Russia and many other countries whose production standards, by the way, have been deemed woefully inadequate and unsafe for American patients.

It should be obvious to any observer of global health care policy that socialist price controls are harmful to patients and harmful to the American economy. Key policymakers such as House Speaker Nancy Pelosi (D-Calif.) should have some understanding of the chilling effect that such policies have on innovation and investment in R&D. Yet, she has ignored the global experience and has fallen into the trap of proposing price controls and a medicine tax on the U.S. health care system just to appease radical socialist elements in the Democratic Party.

If passed into law, Pelosi’s plan would send the American health care system down the same muddy path that the Europeans have taken. Medical R&D would suffer, and American patients would die. It really is that simple.

Pelosi’s plan would not only result in lethal delays for patients seeking life-saving medicines, but it would also ensure that America steps away from leading the world in breakthrough medical innovation. This presents an ample opportunity for a number of other nations to pounce on our weakness and attempt to fill our patients’ needs. Indeed, Pelosi’s plan would create an opening for countries like China and Russia to step in a grab market share from American drug companies. Just at a time when we are trying through trade agreements to bring industries back to the United States, here we have Pelosi unwittingly maneuvering to send one of our brightest shining industries overseas.

The way Pelosi’s plan would work is just as un-American as the outcomes we could expect. She is proposing that the U.S. government “negotiate” the price of up to 250 drugs so that the price could not be greater than 120 percent of the average prices in six other countries. The problem is, the comparison countries themselves have warped prescription drug markets because of their own socialist pricing policies. In addition, under Pelosi’s plan, if a drug manufacturer were to walk away from the “negotiation,” the government would retroactively tax the manufacturer up to 95 percent of its last year’s sales and would continue that taxation until the manufacturer complied.

Pelosi’s definition of “negotiation” seems like something she might have gotten from some fictional motion picture mobster. That is about the only place Americans are accustomed to seeing such heavy-handed, anti-market ideas put into practice. It would be a nightmare scenario brought right into American hospital rooms and doctors’ offices. The bargaining chips under Pelosi’s plan would be not only the prices of prescription drugs but also Americans’ lives.

The bottom line: Pelosi’s prescription drug plan would harm vulnerable American citizens and venerable American industries. At the same time, it would benefit unreliable foreign companies and unfriendly foreign countries. It must be stopped.

Dr. Kent Kaiser is senior advisor to Trade Alliance to Promote Prosperity.

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