It’s Really Not SMART Legislation

Lawmakers introduce legislation for a variety of reasons, which already indicates there’s a problem. One would think that the only reason legislation should be introduced is for the betterment of the citizenry, but sadly, that’s not always the case. Take the latest piece of legislation, the SMART Price Act, that is being introduced by U.S. Senators Amy Klobuchar (D-MN) and Peter Welch (D-VT). This proposed legislation would amend the drug fixing language in the Inflation Reduction Act (IRA). These two Senators worked hard to get the price fixing language into the IRA. I’ve talked a lot about this language that serves to block innovation and allows the government to insert itself into the extremely successful drug discovery process and dictate prices of new, life changing medicines. We discussed the IRA last month, at our latest Facebook Live event. Our special guest, former U.S. House Speaker Newt Gingrich, wondered why, when we are at the dawn of huge breakthroughs and new discoveries, our lawmakers are choosing to sign into law policies that will chill investors and limit breakthroughs. He voiced his opinion that this is the time we ought to be removing roadblocks to research and finding ways to increase resources for innovation, not discouraging it. Notwithstanding the impact of this price fixing approach, Washington passed this partisan bill, and the gears are turning in Washington to implement it.

So . . . a logical question may be, why do these two Senators and the other Democrats who have joined them think it is necessary to amend this new law? Which brings me back to the beginning of this blog—this bill has nothing to do with the betterment of our citizenry and everything to do with optics, getting re-elected and setting the stage for more restrictive laws and government intervention. The SMART Price Act (Strengthening Medicare and Reducing Taxpayer Act) expands the number and kinds of drugs that the government has the power to price fix. The bill has little chance of moving forward, but it does show the long-term goals of these Senators and the current Administration. In a recent blog I wrote about the insidious way a camel can worm his way into the warmth of his owner’s tent, with the first step being to insert his nose underneath the tent wall but with the final goal being to be completely inside. It seems that these two Senators looked at the price fixing language in the IRA, not as a final solution, but as the first step to slowly insert the government into every aspect of Medicare’s prescription drug program. The ink is barely dry on this bill before they want to increase the government’s power over our prescription drugs.

The SMART Price Act is very small as compared to the 274-page IRA, yet it would have an enormous impact on innovation and access to new medicines. The new legislation is a little over three pages long but dramatically changes the impact of the IRA. Here are four ways it increases the power of the government over our prescription drugs:

• It eliminates the long-standing law that prohibits the government from total control of the Part D program while also allowing the creation of a government created national formulary. I for one don’t want the government telling me what drugs I will and won’t have access to.
• It doubles the number of drugs subject to price controls in 2026 from 10 to 20 and increases the number from 15 - 20 to 40 drugs in 2027. There is no reasoning for the increases, no evaluation of the impact, no benefits itemized, just a promise to save patients money.
• It moves up the eligibility for Medicare Part B drugs to fall under price controls to 2027. These are the drugs that are often injected at the doctor’s office or hospital for diseases like cancer. Again, no justification for this change was offered.
• It reduces the exclusivity from price controls down to three years for many drugs. This virtually eliminates the benefits of competition from generics and biosimilars.

My logical mind looks at this legislation and I would hypothesize that, since its only reasoning for adoption is that the increase in the number of drugs and the decrease in the exclusion period would be to save money, we should double the numbers again, or better yet, to save even more money, why not put all our medicines under government dictated price controls? I think that’s exactly where these Senators are leading us.

I look at this legislation and all I see is a bid to increase the government’s role in our healthcare and nothing for the long-term betterment of Medicare beneficiaries. How quick we forget that this debate over whether a new prescription drug program should be government controlled or it should be a public/private partnership was conducted at the end of 2003 and the choice of a public/private partnership was adopted, a choice that cost 40% less than projected and has an almost 90% approval ratings by those who use it. We made the choice 20 years ago and it was a good one.

While this legislation has a small chance of passing, it will make the next watered down proposed legislation seem more palatable. Grandstanding, optics to get re-elected and power positioning do little to solve the problems in our country. It’s important that we pay attention to these insidious moves to insert the government into our healthcare. We’ll do our best to keep you alerted to these serious threats.

Best, Thair