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   From: fjb@nytimes.com   
      
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   > Everybody say, "THANKS DEMOCRATS!" "YOU FUCKING ASSHOLES!"   
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   The so-called ‘Inflation Reduction Act’ will not reduce   
   inflation, but it will make the Democrats’ pharmaceutical allies   
   rich.   
      
   The “Inflation Reduction Act,” which analysis projects will   
   actually increase inflation, is full of the typical prescription   
   drug cost “solutions” offered by Beltway think tanks: allowing   
   Medicare to “negotiate” the cost of a handful of drugs each   
   year, capping prescription drug price increases, and limiting   
   out-of-pocket prescription drug spending. Democrats are using   
   populist rhetoric to conceal how these measures will raise   
   prescription drug prices and thereby artificially enrich the   
   pharmaceutical companies that are some of the Democratic Party’s   
   largest donors — all while leaving everyday Americans to pay the   
   bill under the threat of another 87,000 armed IRS agents.   
      
   At first glance, allowing Medicare to negotiate the cost of   
   drugs seems like a pro-market rather than pro-monopoly move,   
   even if the Congressional Budget Office estimates spending on   
   the negotiated drugs will save taxpayers just 2.5 percent on   
   Medicare drug spending over the next decade. But this isn’t   
   “negotiation” in the colloquial sense — with the ill-named   
   Inflation Reduction Act, “negotiation” means accepting the price   
   tendered by Medicare, counter-offering, or, if no agreement has   
   been reached by the end of the two-year “negotiation” period,   
   facing taxes of 65 percent to 95 percent on drug sale income.   
      
   If you’re thinking, “that sounds a lot like price controls,”   
   that’s because it is.   
      
   By authorizing Medicare to “negotiate” 10 drugs per year   
   starting in 2026 and up to 20 starting in 2029, there’s no   
   question that this legislation will force pharmaceutical   
   companies to jack up the prices of every other drug they have   
   before those too become eligible for “negotiation.”   
      
   As one drug pricing data firm CEO put it, by authorizing this   
   price control system, “you give opportunity for the market to   
   calibrate its prices in preparation for the negotiation.” In   
   other words, pharmaceutical companies are going to push prices   
   as high as they can for as long as they can.   
      
   So what kind of price increases should we expect? This   
   legislation includes a provision to cap Medicare prescription   
   drug price increases at the rate of inflation, which over the   
   past two years combined has been 14.5 percent. For reference,   
   even with high inflation and high demand for drugs, prescription   
   drug prices rose 2.5 percent over the past two years. Amid the   
   expectation that profits could be curtailed significantly after   
   seven to 11 years for each drug, one would expect pharmaceutical   
   companies to increase prices as much as allowed every year until   
   their drugs are selected for “negotiation” — far higher than the   
   2.5 percent increase we’ve seen since 2020.   
      
   If “negotiations” still sound like a bad deal for pharmaceutical   
   corporations, don’t worry — Democrats included a mile-wide   
   loophole for avoiding “negotiations” entirely. Under this new   
   law, any new formulations of otherwise qualifying drugs restart   
   the entire “negotiation” eligibility timer. Facing a huge loss   
   in profits? No problem, just make a minor molecular tweak and   
   throw that drug right back on the market at a higher price than   
   before.   
      
   Now, these changes could make the average Medicare beneficiary’s   
   out-of-pocket prices skyrocket out of control and cause some   
   serious political blowback. As expected, however, there’s an   
   Inflation Reduction Act provision for that as well: By capping   
   annual out-of-pocket expenditures for Medicare beneficiaries at   
   $2,000, the average beneficiary might not even notice the   
   increase in drug prices — with seniors taking an average of five   
   drugs (seven for those in nursing homes) that each can cost an   
   average of $6,604 per year ($33,020 total), taxpayers are   
   already picking up the vast majority of the tab. Though capping   
   out-of-pocket expenditures does limit the direct spending by   
      
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