The Republicans are currently a bit lost. President Trump wasn’t their pick. He wasn’t the next in line and doesn’t play their games by their rules. They are just realizing they’re no longer in complete control of Congress. In the new era of social media, few of them of switched gears to stay in a race that’s an uphill battle. All of this means that more and more Republican leaders are feeling left behind, forgotten, and inadequate.
In response, some have blindly followed the president: That wouldn’t be my choice, but it is understandable. Very few are in the Never Trump crowd: That’s also not my choice but understandable. Others have decided to embrace populism and move to the left while adopting policies that rely on top-down enforcement: a belief that they, the politician, know best.
For this, they should be laughed out of the caucus. But given the current atmosphere of confusion, they are allowed to exist because there is no consistent brand on what it means to be a Republican. (Likewise, there certainly isn’t a consistent brand for Democrats either. But that’s nothing new.)
These politicians have adopted policy ideas to regulate the Internet, they have sponsored policies that threaten companies for not promoting them, and now Sen. Rick Scott, R-Fla., has introduced a bill that would enact price controls.
From his bill, an approved drug or biological product “may not exceed the lowest retail list price for the drug among Canada, France, the United Kingdom, Japan, or Germany.”
I get it, drug prices are high. But price controls don’t solve the problem.
Price controls will likely exacerbate the problems in our healthcare system, and in a way that is harder to recover from, harder to reform in the future, and hurts more people. Pegging that price control to foreign countries is even worse, especially when it comes to the availability or supply of new drugs.
John Goodman, the president of the Goodman Institute and the father of Health Savings Accounts, told me, “The lower the price that foreign countries negotiate, the longer they wait for new drugs.” Or, as he has said in the past: You can pay with cash or waiting, but you pay either way. The numbers back him up.
Trump has proposed his own ways to help get drug prices under control, some good and some bad.
On the good side, his administration has discussed going after foreign countries that don’t respect U.S. intellectual property rights. This would likely help bring down U.S. prices, but if not would at least encourage more research and development — and therefore even more new innovative drugs. In maybe his strongest move, his administration has started working on squeezing the middlemen out by ending rebates that, like kickbacks, have caused the cost of the drugs to skyrocket. This change helps return the patient to the driver’s seat and helps restore a true economic market when it comes to prescription drugs. For example, with insulin companies in the news, the drug companies that manufacture insulin have started providing the money that they are actually making, and while the prices have been going up rapidly, they have actually been netting less because of the middlemen taking more and more.
There have also been efforts to streamline FDA drug-approval process for generics, which is the speed bump, or bureaucratic quagmire, that Martin Shkreli used to raise his drug prices to exorbitant levels without fear of competition, despite the fact that the price increase was on a generic drug.
On the bad side, Trump has also suggested his own International Pricing Index. While I have written about the problems with the president’s plan to import foreign price controls, it doesn’t hold a candle to how bad Rick Scott’s plan is. His plan is for the whole market.
There are ways to get lower drug prices. Give more power to the patient. Encourage competition. Hold foreign controls responsible when they infringe or bully a U.S. company over their intellectual property. The answers don’t rely on top down efforts to manhandle the market: They rely on making sure that the right incentives are in place to encourage competition, to encourage research and development, and for patients to demand lower prices.
Maybe the Republicans need to start a new Monday meeting to repeat a new mantra: “Regulations are bad, price controls are bad, free trade is good, competition is good.” Or, at least, they should get together and figure out who they are as a party and what direction they are going to take.
Charles Sauer (@CharlesSauer) is a contributor to the Washington Examiner’s Beltway Confidential blog. He is the president of the Market Institute and previously worked on Capitol Hill, for a governor, and for an academic think tank.
