NORQUIST: Pelosi Is Pushing A 95 Percent Penalty On Drug Companies — But Americans Would Pay The Price


Grover Norquist President, Americans for Tax Reform
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Democratic candidates for president are running on a socialist agenda of higher taxes and vast new government spending programs. These candidates have proposed countless tax hikes on families and businesses including income tax increases, new payroll taxes, capital gains tax increases, corporate tax increases, and death tax increases.

Democrats in Congress share this obsession with higher taxes. Impeachment aside, Democratic House Speaker Nancy Pelosi’s top priority is a drug pricing proposal that would impose a fine of up to 95 percent on revenue from drugs that companies failed to offer insurers at rates negotiated with the federal government. The fine could hit hundreds of medicines, including drugs that treat cancer, hepatitis C, epilepsy and multiple sclerosis.

This tax hike plan will restrict access to vital cures and harm the ability of manufacturers to create new life-saving innovations. It could cost thousands of American jobs and surrender American’s competitive advantage as a global leader in research and development.

This proposal, known as H.R. 3, the “Lower Drug Costs Now Act,” imposes this fine on the sales of up to 250 drugs if the manufacturer does not agree to government set prices.

Under this plan, a manufacturer selling a drug for $100 would owe $95 in fines in addition to corporate taxes owed. Unlike many other taxes in the code, this tax is not deductible when determining income taxes so could conceivably result in a manufacturer owing over 100 percent of their total sales in taxes.

This means that a manufacturer selling in Pelosi’s home state of California would still be liable for the 21 percent federal corporate tax and the 8.84 percent state corporate tax. The fine is also applied retroactively, so if enacted, would hit manufacturers for decisions already made.

If fully imposed on the top 250 drugs in Medicare Part D, Pelosi’s plan would impose a $112 billion tax hike on seniors’ medicines, based on data compiled by Patients for Affordable Drugs. This tax applies to total sales, not just Part D sales, so the overall tax could be far higher.

The Pelosi plan’s 95 percent tax on seniors’ medicines could result in drug shortages in the U.S. This is not fear mongering – the Pelosi drug tax is so onerous that the non-partisan Congressional Budget Office predicts that that a manufacturer will either comply with government price setting (which will not trigger the tax) or leave the U.S. market entirely (resulting in a zero liability as the tax is on U.S. sales).

Additionally, the Pelosi legislation will harm jobs. American pharmaceutical manufacturers lead the world in medical development and account for almost 60 percent of global R&D. This innovation supports 3.8 million jobs directly or indirectly. This could cost $1 trillion a year and prevent 100 lifesaving medicines from being created over the next decade, according to a report by the Council of Economic Advisors.

Pelosi’s plan could result in the loss of 700,000 jobs across the country including 135,448 in Pelosi’s home state of California.

Politically, Pelosi’s 95 percent fine represents another step toward the ultimate goal of the left — a complete takeover of the U.S. health care system.

A majority of Democrats in the House and Senate already support proposals to create government-controlled health care, often branded as “Medicare-for-all.”

Under socialized medicine, 180 million Americans would be forced to give up their current plan, and 25 million Americans would lose their Health Savings Account. Care would be arbitrarily apportioned and rationed by the government.

Worse, the costs of this plan would be borne squarely by middle class families. It would require between $30 and $35 trillion in tax hikes, according to the Urban Institute.

The Committee for A Responsible Federal Budget estimates an “aggressive set of tax hikes” on the wealthy and corporations, including a wealth tax and doubling existing capital gains, individual, and corporate income rates would raise just $10 trillion — or roughly 30 percent of the cost.

Pelosi’s 95-percent tax plan does not represent a good-faith effort to lower drug prices. Rather, it is akin to confiscation of property.

While reasonable efforts to lower drug costs should be considered, Pelosi’s plan is an unabashed proposal to move U.S. health care toward socialism. If enacted, it will harm American innovation, destroy hundreds of thousands of jobs across the country and reduce access to life-saving medicines.

Grover Norquist is president and founder of Americans for Tax Reform, a nonprofit taxpayer advocacy organization founded at the request of President Ronald Reagan.

The views and opinions expressed in this commentary are those of the author and do not reflect the official position of The Daily Caller.