Build Back Better would have devastated the prescription drug market
Among the array of policy prescriptions that were embedded in the Biden administration’s now-bricked Build Back Better proposal was a destructive nostrum that isn’t getting nearly the attention it should.
The R Street Institute’s Jonathan Bydlak writes the problem rests in how the bill would distort the market for prescription drugs:
Provisions in the bill would, among other things, impose rebates on drug manufacturers if prices rise faster than inflation. It’s an idea that sounds great in the current moment of creeping inflation, but is ultimately little more than a market distortion likely to produce an array of adverse consequences.
A new University of Chicago study looked at the impact of the bill on “innovation and patient health” and found that BBB would reduce spending on drug research and development by “about 18.5 percent.” It concludes that such a reduction might limit research and development, potentially leading to 135 fewer new drugs.
Perhaps most damning, the study also concluded that the corresponding drop in drug production would result in a loss of 331.5 million life years — a number 31 times larger than the life years lost in the United States as a result of COVID-19. That’s presumably not the outcome that Democrats had in mind.
But their proposal doesn’t just impact the market for new brand-name drugs. It also would undermine access to affordable generic and biosimilar medicines already approved by the Food and Drug Administration (FDA).
Distorting markets, curbing research, killing people? Sounds like we all dodged a major policy disaster.