Many distortions in drug prices are due to mandatory Medicaid rebates that include an inflation adjustment and require that states receive the “best” price of any private plan. Drug makers have been reluctant to let private insurers make installment payments on CAR T-cell cancer therapies based on their efficacy because they could be forced to provide steep discounts to Medicaid that are lower than the treatment costs.
Drug makers get a bad rap because they sometimes raise prices for no apparent reason, and consumers are facing sticker shock because of rising deductibles and co-payments. But net prices after rebates paid to insurers and the government have been falling amid faster generic-drug approvals and more competition from branded drugs.
Price controls would hamper competition by slowing new drug development. The U.S. accounts for most of the world’s pharmaceutical research and development, so there would be fewer breakthrough therapies for rare pediatric genetic disorders, cancers or hearing loss.
Read more: Pelosi’s Expensive Drug Bill
