The Biden administration was a disaster for Texas. Its failures to address inflation, illegal immigration, and homelessness all did severe damage, just to name a few. But the most lasting harms will be felt in an area that few people may expect: health care.
Simply put, Biden’s landmark Inflation Reduction Act has broken Medicare. Despite Biden’s promises, premiums continue to rise. Meanwhile, insurers are narrowing their coverage to exclude critical drugs.
Biden’s changes to Medicare have put nearly 5 million Texans at risk. And unless U.S. Sen. John Cornyn and the rest of our congressional delegation take immediate steps to contain the damage, things will only get worse.
The IRA’s prescription drug provisions were supposed to reduce costs for Medicare beneficiaries – but they’ve backfired spectacularly. The price negotiation program gives Medicare the power to set prices for certain drugs starting next year. Yet instead of helping seniors save money, the IRA’s heavy-handed market intervention has driven their healthcare costs up across the board.
Last year, the average monthly Medicare Part D premium increased by over 20%. Last summer, the Biden administration created “premium stabilization” subsidies – forking over billions of taxpayer dollars to insurers to essentially bribe them into minimizing premium hikes for this year’s plans.
But come next year, the repercussions of the IRA will be harder to hide. That’s because millions of seniors enrolled in Medicare Part D are projected to see their out-of-pocket costs increase as well. Seniors may also have a harder time accessing certain medicines as insurers impose new access restrictions to counteract their rising costs.
Perhaps the most devastating component of the IRA is the separate, arbitrary timelines it creates for when two categories of drugs become eligible for price controls. More complex, infused treatments are eligible for price controls after 13 years on the market, while pills and certain medicines that can be injected at home become eligible after only nine.
That four-year disparity may seem small, but for investors, it means a lot. On average, it takes about 12 years and more than $2 billion to bring a new treatment to market. So four extra years of market prices can be the difference between a company recouping the costs of research and development and going under.
The IRA’s price control scheme already discourages innovation in a risky field, but its “pill penalty” makes matters worse – tilting future research and development in favor of drugs that are less accessible and more expensive.
We’re already seeing this trend disrupt life science innovation across the country. Late last February, Pfizer announced that it would dramatically shift R&D in its oncology department towards infusible drugs and cut back significantly on research for pills.
Other companies – such as Roche, Eli Lilly, and Merck – are facing similarly tough decisions. In total, drugmakers have already canceled 40 research programs and more than 20 drugs because of the IRA.
The pill penalty will have crushing consequences for Texans. It’ll mean fewer options at our local pharmacies and more trips to the hospital. Our state already leads the nation in rural hospital closures – if patients lose the option to take their medicines at home, our health system may not even be able to provide the treatments they need.
What’s more, the pill penalty threatens one of our state’s most productive economic sectors. Texas houses more than 6,000 biotech firms and employs over 105,000 biotech and life science workers. The Texas Medical Center – the largest medical complex on earth – performs more clinical trials than anywhere else in the world.
If the IRA continues to keep investors from funding new developments in life science, companies and jobs across the Lone Star State will take a major hit.
Our legislators have an opportunity to avert this worst-case scenario by passing the Ensuring Pathways to Innovative Cures (EPIC) Act, which would eliminate the pill penalty by equalizing the grace period at 13 years for all types of drugs.
The EPIC Act contains one section with fewer than 100 words. It’s a short and sweet legislative fix that can be tacked on to any reconciliation or funding bill.
If the IRA isn’t fixed, our state’s citizens – roughly 15% of whom are Medicare beneficiaries – will become the collateral damage. Sen. Cornyn and the new Republican majority can prevent that from happening by lending their support to the EPIC Act.
