In a recent turn of events, Senator Bernie Sanders has raised eyebrows by calling for the subpoena of two drug company CEOs, sparking both curiosity and concern. Market Institute President Charles Sauer’s new article in Townhall delves into Sanders’ unconventional tactics, questioning the wisdom of his confrontational approach to the Inflation Reduction Act (IRA) and its contentious price controls.
Rather than allowing legal processes to unfold, Sanders opts for public testimonies, described by Sauer as a “defacto defense” of the IRA. He raises concerns about the potential long-term consequences of such measures, drawing parallels with historical instances of price controls leading to negative outcomes.
“It’s easy to write off Bernie Sanders’ latest move simply as an octogenarian acting like a grumpy old man. But Bernie Sanders is no suburban retiree with a chip on his shoulder. He’s a senior Senator who heads an important committee, so when he levels threats –people are justifiably nervous.
On Thursday Sanders called for a vote to subpoena two drug company CEOs to testify in front of his committee. The CEOs in question head companies that are suing HHS because of the price controls included in the Inflation Reduction Act (IRA). The third of three companies that had filed suit, had previously agreed to show…if he wasn’t alone.
Instead of waiting on the legal system to work and for these cases to make their way through the courts—perhaps even the Supreme Court—and instead of working on bipartisan legislation that addresses drug costs, or a policy that improves drug supply instead of shrinking it, Senator Sanders is demanding these CEOs sit for what amounts to a public humiliation session, an inquisition posing as a fact-finding mission.
In recent years this tactic has regrettably been employed by both parties. Republicans hauled the CEOs of large tech companies in to grill them on bias in their platforms. And though it’s generally not a tactic I support, Senator Sanders’ use of it in this case is demonstrably worse, a breach of norms (and perhaps laws against retaliation). His colleagues should let him know they oppose it. They certainly shouldn’t underwrite his vendetta by voting in favor of subpoenas on January 31st.
Frustration with private companies on both sides of the aisle is understandable. Republicans felt that Facebook was wrongfully silencing Conservatives by suspending accounts and taking down posts, even when they promoted crack pot ideas or veered into online bullying without considering the negative effect the behavior was having on the platform. Senator Sanders perhaps is frustrated that drug makers aren’t making decisions that he would prefer in his fairytale version of the economy.
The 21 November press release HELP Committee Democrats put out maintained that the proposed hearing was meant to determine “why the United States pays, by far, the highest prices in the world for prescription drugs.” But Senators are only playing dumb. They know why U.S. prices are higher; they’ve already asked other pharmaceutical CEOs this very question. The real aim of the hearing was made clear two weeks before the invites went out when Sanders admitted he would be calling the drug companies who’d challenged the partisan Inflation Reduction Act in front of the committee.
No doubt Sander’s planned pillory session is a defacto defense of the IRA and its price setting provision that forces drug companies to comply with set prices on certain drugs or face a 95% tax.
Price setting is bad policy…really bad, just ask the Soviets. But, it allows Democrats to stand on their soap box and claim that they are doing something. The problem with price controls is that they have negative effects on supply. As Americans learned in the 70’s, capping gas prices led to gas shortages and created long lines at the pump.
Setting drug prices is different. Though government fiat might lower prices today, in the long run, after dwindling corporate returns lead to less investment in R&D, there will be fewer new drugs, fewer new cures, and less help for our loved ones. Based on their zeal in passing and now defending the IRA, it appears this is a price Democrat politicians are willing to pay.
Companies like J&J, Merck, and Bristol Myers have every right to question the legality of the price setting, particularly as enacted by legislation supported by only one party. That Bernie Sanders would want to interrogate, even punish, CEOs for exercising Constitutionally guaranteed rights should make everyone uneasy, certainly his Senate colleagues.
If Senate democrats were serious about bringing drug prices down, they might examine where free markets are already achieving that aim, rather than trying to shame CEOs into embracing Soviet style price setting.”