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85 Conservative Groups Call on Congress to Repeal Joe Biden's 95 Percent Tax on Prescription Drugs

Ryan Ellis, President

85 conservative groups today sent a letter to the bipartisan Congressional leadership urging them to repeal President Biden's 95 percent tax on prescription medicines. The text of the letter is below: Dear Speaker Johnson, Leader Jefferies, Leader Schumer, and Leader McConnell:

As you know, a Democratically-controlled Congress passed and President Joe Biden

signed the so-called “Inflation Reduction Act” in summer 2022. Along with a super-sized

IRS, multiple down payments on the Green New Deal, and Obamacare subsidies to bail

out that failed program, President Biden’s signature law created a new government

price control on prescription medicines enforced by the threat of a 95 percent excise

tax on the same drugs.

This price control is called a “negotiationon” by proponents of the law, but there is no

actual choice involved. A drug manufacturer must submit to the government-imposed

price control, or subject sales of that drug to a confiscatory 95 percent excise tax. That is

no choice at all. Robust negotiation and competition requires the ability to say “no.”

Like other excise taxes (gasoline, beer, liquor, airline tickets, etc.), this new 95 percent

tax on prescription medicines will ultimately fall on the end consumer–in this case, the

patient at the pharmacy counter who could face a drug store bill twice as high as before.

If the tax is avoided by the drug company thanks to it succumbing to the government

price control, the pharmacy customer will suffer the usual impacts of price controls–

scarcity of the medicine he needs, and a slowdown of new cures as research costs can

no longer be funded by drug sales.

A key danger of Joe Biden’s 95 percent drug tax as the “alternative” to the government

price control is that it might spread to other areas of the economy. One could easily

see a 95 percent tax on internet service providers that don’t submit to an FCC internet

price control, a 95 percent tax on interest collected by banks that don’t submit to a HUD

mortgage rate cap, a 95 percent tax on gasoline which is too expensive for the Energy

Department, or a 95 percent tax on car manufacturers who don’t sell government price-

controlled vehicles at the Commerce Department’s preferred price. The only limit to this

practice is the political will of the Congress and the president at any given time. This 95

percent tax on prescription medicines is the test case for using this model to command

and control the economy.

There is nothing wrong with market competiton bringing down the price of

prescription drugs. But government price controls will lead to minimal production,

scarcity of the medicine, and eventually government rationing. The alternative, a 95

percent drug tax, will mean a massive increase in the price of the medicine for

everyone in America, along with the prospect of other harmful distortions to

our health care system and our economy.

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