One of the first things a new Congress or administration must do after taking office is to reverse the mistakes made by the outgoing leadership. After all, that’s what voters want. It’s why the change in leadership occurred in the first place.
As 2025 begins, there is plenty to undo. Some things, such as the Biden family pardons, can’t be undone. However, others, such as the shameful Biden “Inflation Reduction Act,” can and must be tossed in the trash immediately. Biden-era policies that ended up hurting the economy are just what the voters opposed when they returned Republican control of the White House and Senate and allowed them to retain the House of Representatives.
This Inflation Reduction Act was always misnamed. Democratic lawmakers must have selected the name because so many of us have Individual Retirement Accounts and love them. As the stock market goes up, we feel richer. But Biden’s IRA only ended up making us poorer.
The effort was costly. According to the Congressional Budget Office, the act contained green tax credits, spending using the tax code that cost $270 billion over a 10-year window. The Joint Committee on Taxation projected that effort to be even more, at least $663 billion through 2023. The University of Pennsylvania’s Penn Wharton Budget Model projected all the climate and energy provisions as costing taxpayers $1.045 trillion. More government spending causes the government to need to create more money, which causes inflation.
One of the key promises of the act was that it was supposed to help control drug prices by allowing the government to “negotiate” with drugmakers. It wasn’t much of a negotiation because, of course, the government has all the power. The government would decide what it was willing to pay, it would tell the drugmaker, and if that company didn’t agree, the government would impose a “tax” of 95% of the drug’s price.
Drugmakers couldn’t win and couldn’t avoid the law.
But the Inflation Reduction Act had hidden consequences. When it took effect, there was already a good bit of price competition in Medicare Part D. That’s because most seniors had dozens of plans to choose from, and those plans competed for customers by providing better prices.
After the act, however, there is less competition among plans. That means fewer choices for patients. There will be fewer drugs as well.
“While Part D plans are required to cover medicines that are selected for price setting, there are no policies protecting access to other medicines,” the industry group Pharma explained. “To adapt to the changing Part D structure and to extract as much money out of the program as possible, Part D plans will likely rely on more utilization management and move more medicines to more expensive non-preferred and specialty tiers in their formularies.” That is to say, doctors will choose drugs based on price instead of simply based on effectiveness. It isn’t a prescription for a healthy system. Meanwhile, the drug companies will be forced to increase prices on drugs that are not under the price control regime in order to make up the money they are losing on government-controlled drugs.
That’s not the only way that customers will end up paying more. Before the Inflation Reduction Act took effect, the Internal Revenue Service estimated that the drug tax “will impose a total annual reporting burden of 1,380 hours, as discussed in part II of the Special Analyses section of this preamble.” Those hours will be billed by lawyers, and the drug companies will pass the costs along to consumers (all costs for all taxes are eventually passed along to consumers; companies don’t pay taxes, consumers do).
Finally, “Doctors will now be reimbursed by Medicare based on the much lower government-set price for selected medicines instead of the market-based price used today,” Pharma warned, “which could also inadvertently impact reimbursement in the commercial market as well.”
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Remember: the point of the act was supposed to be to reduce inflation by controlling prices. Instead, “ In 2024, average premiums for stand-alone Part D plans (PDPs) increased by 21.5 % on average nationwide,” the Council for Affordable Health Coverage reported. “This is the largest increase ever in PDP premiums.”
Lawmakers passed the Inflation Reduction Act at the height of the Biden presidency when Democrats controlled the White House and both houses of Congress. They rammed it through without any Republican votes because the GOP really wanted to do something about inflation. The new Congress should repeal the entire bill and allow the president to return with a better offer.
Brian Darling is former Counsel for Sen. Rand Paul (R-KY).