President Joe Biden’s term will expire on January 20, 2025, at which time a new president will be inaugurated. He ended his decades-long political career last month by announcing he would not seek re-election. Biden endorsed his running mate, Kamala Harris, in the November election.
Soon after, the tributes began pouring in. Many of them focused on Biden’s health record. “He was propelled to office largely on his health agenda,” Axios noted. As vice president, he launched the Cancer Moonshot, a plan to revolutionize treatment and end the disease as we know it. He continued that effort throughout his presidency, while also following through on campaign promises to expand Obamacare and use government power to cap prescription drug prices.
It’s a litany of weaknesses, and it’s nothing to cheer about. His efforts to shore up Obamacare have cost taxpayers billions while doing nothing to reduce insurance costs. His price controls are already stifling pharmaceutical innovation and will therefore undermine the goal of his Cancer Moonshot, which is to end cancer as we know it.
The best thing for America’s future would be for Biden’s health care reform to leave office with him.
Biden made headlines in 2010 when he was caught on microphone telling President Barack Obama that the Affordable Care Act was a “big deal.” He has been eager to shore up his former boss’s namesake law, boasting that 8 million people signed up for Obamacare’s exchanges during his time in office.
But enrollment has only increased because the Biden administration is giving people more money to enroll. In 2021, Biden signed the American Rescue Plan Act, which included $34 billion in new subsidies for scholarship enrollees. The following year, the Inflation Reduction Act injected an additional $64 billion in subsidies into scholarships through 2025.
Without these subsidies, many Americans would not be able to afford supplemental health insurance. Thanks to the costly measures imposed by the Affordable Care Act, average premiums for benchmark individual health insurance plans have more than doubled since the measures were enacted, from $232 in 2013 to $477 this year.
Moreover, as the Paragon Health Institute has found, under the expanded subsidy scheme, about 5 million Americans are receiving more federal funds than they should. Taxpayers have funded $20 billion in fraudulent spending under Obamacare this year alone.
Wasteful and inefficient subsidies are only half of the health care reform package in the inflation-reduction law. The other half, a provision that gives Medicare the power to set prices for a growing number of brand-name drugs, could be even more disastrous.
Price controls on 10 drugs under Part D will go into effect on January 1, 2026. Fifteen more will be subject to price controls in 2027, 15 more under Part B or Part D in 2028, and 20 each year in 2029 and beyond. Biden says these price controls help seniors afford their prescriptions.
But these price controls will only save the government money. And any short-term savings will be more than offset by a long-term decline in pharmaceutical innovation.
It costs an average of about $3 billion to develop a new drug. When the government sets prices, investors know they won’t get back the money they invested in research and development. So they decide to invest elsewhere.
To top it all off, the IRA imposes price controls on some drugs more quickly than others. Biologics—drugs made from living organisms—are not eligible for price controls until after 13 years. But small molecule drugs, which make up the vast majority of drugs, will be eligible for price controls after just nine years on the market.
This disparity has already led companies to abandon research into small-molecule drugs that can treat a wide range of diseases, from high cholesterol to cancer to Alzheimer’s.
The IRA’s price controls could also discourage generic drug manufacturers from entering the market when a brand-name drug’s patent expires. Why invest in bringing a competing product to market if the government already controls the price of the incumbent drug?
Generic drugs are up to 85% cheaper than their brand-name competitors and account for nine out of 10 prescriptions dispensed in the United States. By discouraging generic competition, IRA price controls could end up costing seniors dearly in the long run.
“Under my watch,” President Biden said last year, “health care is a right, not a privilege in this country.” It would be more accurate to say that under his watch, health care has become more expensive and health policy has become more myopic.
