First, I want to welcome Patrick Hedger to the Taxpayers Protection Alliance (TPA) team as the new VP of Policy. Patrick comes to us from the Competitive Enterprise Institute. We are excited to have Patrick and impressed by his depth of knowledge on many taxpayer and consumer issues. Where did our other VP of Policy Ross Marchand go? Not to worry, Ross is still with TPA as a senior fellow, but he is in law school and will be focusing primarily on that. As a senior fellow, Ross will be continuing his work on the United States Postal Service as well as other critical issues. Patrick has been with TPA for less than a week and has hit the ground running and fit in nicely with the office. We are very excited to have Patrick fighting the good fight with us.
Price Controls for Drugs Will Hurt Patients
With the search for a COVID-19 vaccine and other healthcare issues coming down the pike, we need to make sure that we get as many high-quality medications to market as possible. That means the United States has to encourage innovation. Unfortunately, President Trump took a step backward when he announced a new executive order (EO) that will impose onerous price controls on lifesaving drugs. This reckless policy will make it far harder for producers to research cutting-edge cures, while ensuring shortages at more than 60,000 community pharmacies across the country. President Trump should ditch this failed policy and embrace markets and competition in healthcare.
On September 13, President Trump announced an order tethering drugs covered under Medicare Parts B and D to artificially low prices in other countries. The EO ushers in a “most favored nations” scheme that would require Medicare to take the drug prices paid by other developed nations into account when determining its own reimbursement rates. The idea is for the U.S. to get an even better deal on medications than other first-world countries.
There’s just one small problem: the countries the U.S. would be relying on to set drug prices have socialized healthcare systems. Sure, nations such as the United Kingdom, France, and Germany all have different healthcare systems and diverge in significant ways. But, in all these countries, bureaucrats arbitrarily set drug prices instead of relying on market fundamentals. And this dangerous assumption that government officials know better than producers results in unrealistically low prices that fail to make up for research, development and regulatory costs. Whether in the U.S. or Europe, bringing a medication to market costs billions of dollars and often takes more than a decade. And when manufacturers cannot charge the prices needed to recoup these astronomical costs, they respond by curtailing production and cutting back research into new medications.
Europe has seen these devastating shortages firsthand. According to a 2019 survey by the European Association of Hospital Pharmacists, 95 percent of pharmacists across the continent have cited medication shortages as a pressing problem. An astounding 81 percent of these professionals experienced product shortages more than three times in the past year. Nearly half of all pharmacists cited regular shortages for oncology (cancer) drugs, while more than 30 percent noted the persistent scarcity of statins. Patient and healthcare groups in Europe have pressed European Union bureaucrats to do something about these significant shortages, but regulators care more about talking tough to producers than actually fixing the issue. While there are some drug shortages in the U.S., strong intellectual property protections and pricing flexibility keep problems to a minimum. In most recent years, the Food and Drug Administration has reported 50 or fewer new shortages per year out of approximately 20,000 prescribed products approved for marketing in the U.S. Not all medications are used equally of course, but patients typically face no issues procuring common medications such as statins and routine vaccinations. The “most favored nations” policy will set a disturbing precedent for government meddling and force research and production elsewhere. This would not only set back the fight to beat back coronavirus, but also undermine President Trump’s campaign message of American resurgence.
Antitrust Silliness
Despite the fact that America’s technology sector has kept us connected, supplied, and informed during the worst public health crisis in our lifetimes, there is still a bipartisan fervor to take a bite out of “big tech.” This is frustrating considering that often-times the complaints against big tech completely conflict with one another. On the one hand, conservatives are accusing digital media companies of taking down too much content. Meanwhile, progressives lament that these firms aren’t moderating content strictly enough. Regardless of the validity of these conflicting complaints, the growing calls to reform and use antitrust as a mechanism to address these subjective grievances presents a significant threat to the broader economy.
Over the last half-century, America’s antitrust laws have been moored to what is known as the consumer welfare standard. This standard has rightly curtailed the ability of political actors to use amorphous antitrust authority to achieve policy and political outcomes tangential to marketplace competition. In short, the consumer welfare standard should be treasured by advocates of limited government.
But this status quo of limited antitrust enforcement may soon come to an end thanks to overzealous officials. Currently under the antitrust microscope are Google, Facebook, Amazon, and Apple. All of these companies compete with one another in multiple market segments. In most/all of these segments, from digital advertising to hardware sales, prices are falling. In many cases, the price to the consumer is already zero. The welfare of the consumer is thus quite high. So, to use antitrust law to bludgeon these firms, the consumer welfare standard would have to be sidelined. Doing so would enable political actors to not only weaken America’s world-leading tech sector, ceding precious ground to China, but open the door to a massive expansion of regulatory power. Regulators and politicians would be free to attach all sorts of strings to merger reviews and other antitrust enforcement across the economy, from the energy sector to manufacturing to retail. The cost of said conditions would amount to a de facto tax on American consumers via higher prices, less innovation, and ultimately less choice for consumers in the event mergers are blocked or undone and businesses subsequently fail.
The facts are that both big tech and the consumer welfare standard are largely serving us well. Even if one disagrees with this assessment when it comes to big tech, it is simply too short-sighted and dangerous to abandon the consumer welfare standard. Lawmakers and regulators must refrain from using antitrust as a bludgeon to impose their misguided, often-contradictory policies.
Blogs:
Monday: Watchdog Slams President Trump for Drug Price Controls
Tuesday: Like FCC Chairman Pai, Postmaster General DeJoy Must Double Down On Reform Agenda
Thursday: Watchdog Praises FCC for Four Years of Successes
Friday: A Ban On E-cigarettes Would Harm Public Health
Media:
September 9, 2020: Townhall ran TPA’s op-ed, “Local and State Governments Thumb Nose at Targeted Tax Break Disclosure.”
September 14, 2020: Townhall ran TPA’s op-ed, “Drug Price Controls Undermine Trump’s Campaign Message.”
September 14, 2020: WBFF (Fox, Baltimore) interviewed me about improved economic data from Maryland.
September 15, 2020: WBFF (Fox, Baltimore) quoted TPA in their story, “Baltimore Police Department audit discovers payroll problems.”
September 16, 2020: WFAE TV (Charlotte, N.C.) quoted TPA in their story, “In Presidential Race, Health Care Takes Backseat To Pandemic But Not In NC Senate Race.”
September 16, 2020: The Galion Inquirer (Mt. Gilead, Ohio) ran TPA’s op-ed, “Congress must pass a clean spending bill.”
September 17, 2020: I appeared on WBOB Radio (600 AM and 101 FM; Jacksonville, Fla.) to talk about the Green New Deal and Obamacare.
September 17, 2020: WBFF (Fox, Baltimore) interviewed me about a potential government shutdown and continuing resolution.
September 17, 2020: I appeared on KRC 550AM Radio (Cincinnati, Ohio) to talk about the United States Postal Service and tobacco harm reduction.
September 17, 2020: The Livingston Parish News (Denham Springs, La.) ran TPA’s op-ed, “Congress must pass a clean spending bill.”
September 17, 2020: The Center Square ran TPA’s op-ed, “Groups launch program to boost internet access for American students.”
September 17, 2020: Cronkite News quoted TPA in their story, “Tribe rushes to beat use-or-lose deadline on COVID-19 relief funds.”
September 17, 2020: The Center Square ran TPA’s op-ed, “Lame-Duck Congress isn’t all that it’s Quacked up to be.”
Have a great weekend, stay safe, and as always, thanks for your continued support.
Best,
David Williams
President
Taxpayers Protection Alliance
1401 K Street, NW
Suite 502
Washington, D.C. xxxxxx
www.protectingtaxpayers.org
