OPINION:
Government manipulation of language is a staple of dystopian fiction. “War is peace”; “Freedom is slavery.” And while the dystopian trope is admittedly overused, real-life examples increasingly abound. Take the recently enacted Inflation Reduction Act, a master class in distorting everyday words. Yes, the law does nothing to reduce inflation. But there’s a far deeper and more cynical abuse of language at work in its pages. For example, the law’s debauched use of the words “negotiation” and “fair” befits even the most Orwellian regime.
The Inflation Reduction Act, or IRA, authorizes the Department of Health and Human Services to negotiate a “maximum fair price” for certain “negotiation-eligible” prescription medicines. Here’s how the “negotiation” works.
If you are a manufacturer of an eligible medicine, the negotiation opens with HHS imposing a price cap that is a fraction of that medicine’s list price. If the manufacturer decides that selling its product at a loss is not only unfair but also unprofitable (and thus unworkable), ending the negotiation is not an option. The IRA exacts a “noncompliance” excise tax of up to 1,900% of the medicine’s daily U.S. revenue until the manufacturer capitulates. The law also imposes steep monetary fines — up to $1 million per day for failing to provide information when HHS demands it, and up to $100 million for each piece of incorrect information “knowingly” provided to HHS.
Worse still, if HHS tries to negotiate the price of a statutorily ineligible medicine or miscalculates a “fair” price below the statutory cap, the manufacturer has no legal recourse. The IRA bars administrative or judicial review of either HHS’ eligibility determination or the amount of a maximum fair price. In other words, manufacturers face a stark choice: It’s your money or your medicine. Like “The Godfather’s” Don Corleone, the IRA makes manufacturers whose medicines have been targeted for HHS negotiation an offer they can’t refuse.
It hardly needs saying that the IRA’s “pricing reforms” are stupendously bad policy. In a free-market economy, supply tends to meet demand.
Like any price control imposing a below-market price, the IRA’s price caps will strangle supply. By extorting lower prices from manufacturers, the IRA will increase demand while preventing manufacturers from recouping their costs, never mind their profits. The result is medicine shortages and fewer resources devoted to research and development of lifesaving therapies. True, America has endured bad health care policies before. But what makes the IRA so egregious is its radical break with the rule of law.
In a constitutional republic like ours, one deeply rooted in property rights and free markets, the implications of the IRA’s shakedown scheme are staggering. Start with due process. The right to a hearing is indispensable to due process of law. Even the notorious Star Chamber, with its privy councilors and common law judges, gave the accused their day in court. Yet the IRA, by depriving manufacturers of administrative and judicial review, ensures that the government’s discretion to “negotiate” is total and that unjust or extreme results will go uncorrected, even unnoticed.
Then there’s the Eighth Amendment, which prohibits excessive fines grossly disproportionate to the harm being punished. As the Supreme Court has insisted, a fine’s amount must bear some connection to the gravity of the offense. But under the IRA, the offense may be no more than a manufacturer’s hesitation to agree to give away its product at far-below-market prices. The law’s eye-popping, nine-figure fines bear no conceivable connection to any government injury.
There’s more. The Fifth Amendment prohibits regulatory takings of property without just compensation. And the unconstitutional-conditions doctrine ensures that the government can’t hold hostage your ability to do business while using your constitutional rights as the ransom. Nor do manufacturers voluntarily consent to a made-up “maximum fair price” simply by participating in Medicare and Medicaid. Even under the spending cause, such “economic dragooning,” the Supreme Court explained in NFIB v. Sebelius, is about as voluntary as “a gun to the head.”
“The great enemy of clear language,” George Orwell observed, “is insincerity.” No matter how obscured by regulatory haze, strong-arm robbery is not a negotiation for a fair price. If the Constitution and the rule of law are to continue to hold sway, Americans must begin insisting on lawmakers who take words (and their meanings) seriously.
In his famous essay “Politics and the English Language,” Orwell showcased how the corruption of language has both political and economic causes. As the IRA reminds us, it also has political and economic consequences. Millions of Americans who rely on prescription medicines to maintain their quality of life will soon face those consequences. So will their elected representatives.
• Cory Andrews is general counsel and vice president of litigation of the Washington Legal Foundation. His views are his own.
