President Joe Biden recently announced, with great fanfare, his Cancer Moonshot initiative. Biden used soaring and promising rhetoric about, at last, finding a cure for one of the world's leading killers.
Speaking at the John F. Kennedy Presidential Library and Museum in Boston on Sept. 12, the president declared: "Beating cancer is something we can do together, and that's why I'm here today." For perhaps the first time in his presidency, Biden seemed to cross the aisle and reach out for Republican support by saying: "Cancer doesn't discriminate red and blue; it doesn't care if you're a Republican or a Democrat."
Biden is right that the race for the cure is and should always be bipartisan. After all, who doesn't want to defeat cancer? Well, actually, the president and every Democrat in Congress seem not to have this as a top priority -- or even a priority at all.
Just a few days after giving this speech, the president held a big celebration at the White House with the signing of the so-called Inflation Reduction Act. This bill, among other things, imposes price controls on American drugmakers. Every Democrat in Congress voted against the race for the cure, and the president had a wide grin on his face. Musician James Taylor strummed the guitar at the White House as Biden signed the bill into law.
So, one day the president says he wants to pour more money into cancer research, and the next day he takes $300 billion from the companies that are supposed to develop these new cures.
The law Biden just signed is a de facto tax of $300 billion on the profits of the companies that are on the front lines of trying to win the race for the cure. In other words, Congress transferred almost one-third of a trillion dollars from drug companies, one of America's most productive and lifesaving industries, and gave that money to the wind and solar and electric car industries.
The green energy firms are one of America's least productive industries. Solar and wind survive in most markets only because of tens of billions of dollars of taxpayer handouts.
Does this sound like a good trade to you?
We all want lower drug prices. The good news is that in recent years, drug prices have finally started to come in below the rate of overall inflation. And there are sensible ways that drug prices could be brought down quickly -- for example, by allowing more drugs and treatments to be sold over the counter at drug stores rather than requiring prescriptions and pharmacists approving the transactions at premium costs.
We also could speed up the drug approval process so that new drugs with billions of dollars invested in research and development can reach patients sooner. This would save lives and help the industry get a return on investments.
But price controls always lead to shortages of products and discourage innovation and investment in an industry. American investors pump tens of billions of dollars into drug R&D and biotechnology research. Why? Because they want to make a return on the investment. If you lower the return, then less money will be invested. It's as simple as the law of gravity.
One of the experts on this topic is Tomas Philipson, who specializes in the economics of health care at the University of Chicago. He finds that "price controls on prescription drugs would reduce quality of care by reducing the number of better new treatments coming to market."
Philipson finds that over the next two decades, the price controls would reduce drug R&D by more than one-half trillion dollars. This in turn would result in more than 100 fewer new medicines. Many multiple lives would be lost as a result of these delays in new drugs than the number of Americans who died from COVID-19.
The price controls in the Inflation Reduction Act will reduce cancer research by more than five times as much as the Cancer Moonshot initiative will raise research dollars. In other words, tens of thousands more people are likely to die from curable diseases as a result of these policies. Almost half of the new drug research today is for cancer medicines. Washington has just incentivized investors to pull out.
This is especially tragic because most of the wonder cures of the last 50 years have come from America, not Europe. And most of those lifesaving cures were developed in private labs, not by the government. And profits are what drive that research. Shame on many of the disease groups that refused to speak out against the price controls in the Inflation Reduction Act.
Remember all this the next time you donate $100 or $1,000 to research for cancer, heart disease, Lou Gehrig's disease, epilepsy or Parkinson's disease research. We Americans give. And the government takes away. This is a good way to lose the race for the cure.