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New Study Warns of Negative Impacts from Trump's Drug Pricing Policies

A recent report released by the Center for Medical Economics and Innovation at the Pacific Research Institute (PRI) has raised alarms regarding the potential consequences of the Trump administration’s stance on drug pricing. The study reveals how the push for government-controlled prices, enacted through the Inflation Reduction Act signed into law by President Biden in August 2022, could lead to a substantial decline in pharmaceutical innovation and patient access to essential medications.

The Irony of Seeking Price Control

The brief authored by Sally C. Pipes, the President and CEO of PRI, argues that endorsing government price controls is a step towards embracing the very socialist policies that have historically plagued European healthcare systems. Pipes cites Friedrich Hayek’s warnings regarding the pitfalls of centralized economic planning. She expresses concern that by supporting such measures, some Republicans may inadvertently lead the U.S. down a path of government-run health care akin to European models, which may ultimately disadvantage American patients.

According to Pipes, “Government price-setting is not a market-based solution—it’s a recipe for innovation collapse, longer waits, and reduced access to lifesaving drugs.” This statement encapsulates the essence of the PRI brief, emphasizing that the foundations of a free market should not yield ground to forms of government intervention that could spell disaster for American healthcare.

Current Effects of the Inflation Reduction Act

The data compiled in the brief demonstrate the immediate impacts of the Inflation Reduction Act and its price control provisions, set to take effect for Medicare Part D starting January 1, 2026. Reports indicate that since the inception of this law, 51 research programs have been terminated, and 26 drugs have ceased production, as highlighted by the coalition Incubate, comprising early-stage biotech investors. Furthermore, late-stage clinical trials for small-molecule drugs have witnessed a staggering 47% decline, while early-stage funding for drug treatments has plummeted by 70%.

Dr. Wayne Winegarden, director of PRI's Center for Medical Economics and Innovation and co-author of the study, underscored the alarming trend. He remarked, “The data are clear—the U.S. biopharmaceutical sector is beginning to mimic the failures of European systems, where patients endure long waits and frequent drug shortages.” To illustrate these failures, he noted that in Europe, patients face an average wait time of 19 months to access new medications—something that American patients have not had to contend with until now due to the successes attributable to a free market.

A Call to Action

The report starkly contrasts the U.S. free-market approach—responsible for driving over 55% of global biopharmaceutical research and development (R&D) and accounting for two-thirds of new drug launches—with Europe's statist model that only generates 15.8% of global sales from new drugs. The authors of the brief are urged policymakers to reject centralized planning models and instead reaffirm the principles that have established the U.S. as the leading innovator in the pharmaceutical sector.

In conclusion, the PRI publishes a stark warning: failure to reverse the course of these policies may lead the U.S. to be on “The Road to Serfdom,” with no off-ramp in sight. This chilling notion serves as a crucial reminder of the importance of safeguarding a free-market philosophy in healthcare, ensuring that innovation, accessibility, and quality continue to thrive for American patients.

For further reading, you can access the full issue brief here.