To prevent politicization, the IRA needs strong congressional oversight

It’s easy to lose track of the many pieces of Biden’s so-called Inflation Reduction Act (IRA). The only thing tying its pieces together seems to be that none of them have anything whatsoever to do with reducing inflation. 

While there are a lot of oversight targets in this disastrous bill, including the weaponizing of the Internal Revenue Service (IRS) and heavy-handed energy regulations, Republicans must monitor the bill’s wrongheaded price controls on medicine.  

Congressional oversight is the only force to ensure bureaucrats’ partisan ideologies do not influence life-or-death policy decisions the way they have influenced the IRS.  

Just like what we have seen in the IRS, this new program is primed for wasteful spending, bureaucratic bloat and the installation of partisan ideologues.  

The 2020-passed IRA gave the Health and Human Services (HHS) secretary the authority to “negotiate” the price of prescription drugs on behalf of Medicare. It’s a negotiation in the same way that an armed thief is negotiating for your wallet. If manufacturers don’t accept the price that HHS dictates, they will be subject to a 95 percent excise tax on all sales of the drug.  

The first year it’s in effect, the secretary can determine the prices of 10 prescription drugs. The number of drugs subject to price-setting will increase to 15 in 2028 and 20 in 2029, but it’s safe to assume no supporter of the price-setting agenda in the IRA intends to stop there.   

A study out of the University of Chicago concluded that these price controls would lead to 135 fewer new drugs, generating “a loss of 331.5 million life years in the U.S., 31 times as large as the 10.7 million life years lost from COVID-19 in the U.S. to date.”   

Of course, this level of control comes with enormous power, and in parallel to their funding of the IRS, the IRA’s supporters were aggressive in appropriating a staggering $3 billion to install a new bureaucracy at the Centers for Medicare & Medicaid Services (CMS) for price-setting implementation.   

While members of Congress are already requesting information, an aggressively opaque implementation means that Congress is going to have to get aggressive with its oversight powers to figure out what is going on here.  

Right now, CMS is looking to hire 95 staffers tasked with selecting the first medications included in the new price-control program. Given the Biden administration’s hiring so far, it would be a surprise if the hiring in this new bureaucracy were evenhanded.  

Sure enough, the Biden administration has tapped Kristi Martin for the hiring process — a former senior executive with Arnold Ventures, which funds efforts to place price controls on drugs and restrict access to new medicines. She was also a managing director for Waxman Strategies, a lobbying firm that prides itself on “fighting with drug companies.”  

Understandably, some patient groups are worried that a team under this leadership could use problematic approaches like quality-adjusted life year calculations to make their determinations. This approach effectively puts a dollar value on patients’ lives, calculating the cost-savings that “[perpetuate] unequal access to medical care, including lifesaving care.”  

Congress must move quickly because CMS subterfuge is already beginning. For example, last month, CMS released its initial guidance on the implementation of the price-setting program, and Section 30 describes how the agency will identify drugs for the program. Concerningly, CMS has already described this section as “final” and not open to public comments.  

Further, Section 40 of the guidance slaps a gag order on the negotiations, even going so far as to require the destruction of communications between drug companies and the implementation board. Is that even legal?

Within the guidance, CMS is trying to go further than even the IRA. In the bill, price controls were supposed to apply only to drugs that had been on the market for seven years or 11 years, depending on the product. However, the guidance defines a “drug” so broadly that it could include newer forms of those currently on the market. This policy would destroy manufacturers’ incentive to improve upon existing drugs, as the new product would never be given the opportunity to recover research and development costs.   

With a law that seems to have been written to deliberately obscure the hiring, spending and operation of the price-setting board, the public has no way to see what is going on in these life-and-death decisions without aggressive congressional oversight. 

Though the IRA is a massive, destructive bill, the prescription drug price controls in the bill deserve their share of intensive scrutiny from the Hill, at least until free-market advocates can muster the support to return to a free market in drug development. 

Grover Norquist is president of Americans for Tax Reform.