Drug Price Controls Underperform, Unworkable

Drug Price Controls Underperform, Unworkable

Medicare this month announced the end of its first round of “negotiations” over the prices of 10 prescription drugs covered under the Part D benefit as authorized by the Inflation Reduction Act. The results the Biden administration has delivered are a lot less dramatic than they’re letting on.

According to the White House, the program will save the federal government an estimated $6 billion in 2026, the first year the new prices will be in effect, while reducing costs for seniors by $1.5 billion.

Those figures might seem impressive. But they are almost certainly inflated. In fact, it’s remarkable how little immediate effect on drug prices the program will deliver.