Joe Biden’s “Inflation Reduction Act” didn’t bring down prices – but it is poised to reduce the size of North Carolina’s economy and gut one of its most important industries.
The Tarheel State has one of the strongest biotech sectors in the nation. The life sciences industry directly employs 75,000 North Carolinians and contributes $10 billion to our local economy annually.
But a new study warns that unless North Carolina’s congressional delegation is able to pare back the Inflation Reduction Act’s worst drug pricing policies, the law could endanger over 42,000 jobs statewide and reduce our state’s economic output by $12 billion over the coming decade.
The legislation infamously allows government bureaucrats to arbitrarily set the price of common medicines. History teaches us that price controls suppress production and discourage investments in every industry – whether it was gas lines during the 1970s or rent-control laws resulting in squalid housing conditions today.
But the Inflation Reduction Act doesn’t merely impose price controls evenhandedly – it actively discriminates against some of the most useful prescription medications.
The law gives a class of drugs known as “biologics” – typically, medications that are infused or injected under medical supervision – 13 years of exemption from price controls after receiving FDA approval.
All other drugs are classified as “small molecules,” which typically come in pill form. They get an exemption of only nine years following approval.
Without these four extra years of protection from price controls, there’s less incentive for companies to invest in cutting-edge small molecule therapies. The pill penalty will skew the future of medical research away from pills and towards biologics.
A future where most prescription medications require a trip to a hospital or clinic would be particularly troublesome for many North Carolinians. Our state boasts the second largest rural population in the nation, and we’re already running out of hospital beds. The ability of patients in North Carolina to take their medicine with a glass of water in the comfort of their own home could soon become a luxury.
The government has no business tipping the scales of innovation to arbitrarily incentivize the development of a particular class of drugs. Science, not policy, should direct research and development in this country. Already, dozens of pharmaceutical research programs have shut down in the wake of the legislation’s discrimination against pills.
Thankfully, lawmakers have already taken notice of this perverse incentive.
The Ensuring Pathways to Innovative Cures Act – recently reintroduced by our own Sen. Thom Tillis – would amend the law to give all drugs the same 13 years of exemption from price controls. This simple legislative fix would equalize the development incentives once again.
Tillis and his colleagues should work to include the EPIC Act in the big budget reconciliation bill members will soon take up. Doing so will ensure that future medical breakthroughs are not hindered by arbitrary government regulations.
The EPIC Act represents a crucial step toward a healthier future, where medical advancements are driven by science, not government-imposed restrictions.
Protecting one of North Carolina’s most important industries will require more surgery on the Inflation Reduction Act than just the EPIC Act. But it’s the right place to get started.
