On August 16, 2022, Congress passed the Inflation Reduction Act, which, among other things, enables Medicare to negotiate the prices of certain high-cost prescription drugs, beginning in 2026.[1] Even though it is just one step forward in confronting US pharma’s financialized business model, this legislation was a long time coming.[2] A New York Times article published almost four decades ago reported accusations against pharmaceutical companies by then-US Rep. Henry Waxman (D-CA) of “outrageous price increases” and “greed on a massive scale.” In response to Waxman, drug-company executives asserted that “prices have climbed recently to cover accelerated investment in researching and developing new and better medications to protect Americans.”[3]
Over the decades, the argument that pharmaceutical companies need high drug prices to finance drug innovation has been a mainstay of the industry’s opposition to price regulation. Not surprisingly, with Medicare’s right to negotiate prescription drug prices as a key policy objective of the Biden administration’s Build Back Better agenda, the industry lobby association, Pharmaceutical Research and Manufacturers of America (PhRMA), spewed out a slew of blog posts, with data from commissioned “studies,” to argue that
— source ineteconomics.org | William Lazonick, Öner Tulum | Dec 6, 2022