The House Committee on Oversight and Accountability met last week for a hearing on the Inflation Reduction Act's first year. As one of the witnesses pointed out, the law's implementation — particularly its drug pricing reforms — have already run afoul of some of our government's most basic norms of transparency and accountability.
Normally, federal officials would give citizens a chance to voice concerns about a policy shift of this magnitude — and would need to address that feedback in the final policy. But the IRA's drug pricing provisions sidestep this process altogether by requiring the rule be implemented by "program instruction or other forms of program guidance" — a sub-regulatory process in which the public gets little say.
America's relatively free market in prescription drugs has been an engine of medical progress for decades. It incentivizes risk-taking and innovation in the face of long odds. Nine in ten drugs fail once they reach clinical trials. The possibility of a big payoff — or at least, enough revenue to cover development costs — is what keeps money flowing into pharmaceutical research.
If pharmaceutical firms can't expect to be paid prices commensurate with the value they'd command on the open market — as the federal government has made clear will be the case — then they're not going to attract the kind of investment needed to develop the next breakthrough cancer medicine or Alzheimer's therapy.
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