Lombardo vetoes prescription drug price controls (AB 250)

Staff

As the Governor of Nevada, Joe Lombardo wields significant influence over the state’s political landscape. His decisions on legislative matters and policies have far-reaching implications for the lives of Nevadans just like yourself.

During the 82nd Legislative Session of the Nevada State Legislature, Gov. Lombardo made history by vetoing 75 bills. These vetoes impact the everyday lives of Nevadans and knowing about them can better prepare you for participating in the democratic process.

This article serves as a non-political guide to understanding the governor’s veto of Assembly Bill 250. Its purpose is to empower you with the information needed to make informed decisions and act. Find out how below!

What is AB250?

But first, let’s learn about Assembly Bill 250 (AB250), why the governor vetoed the bill, and how it could impact you and your family.

Assembly Bill 250 proposed price controls on prescription drugs within Nevada.

Assemblywoman Venicia Considine (D-Las Vegas) sponsored the bill, which aims to enforce a “maximum fair price” (MFP) for prescription drugs. AB250 would have capped prescription costs at a price negotiated by Medicare under provisions created through the federal Inflation Reduction Act (IRA).

Initially, the government selected ten brand-name drugs to treat conditions like COPD, diabetes, blood cancer, breast cancer, and strokes. However, the prices are specifically for Medicare recipients, which are about 65 million people (about twice the population of California) across the country.

However, the prescription drug price control bill wouldn’t help anyone else. Though that’s a huge concern, it isn’t the only problem.

Would Prescription Drug Price Controls Fix The Problem?

Imagine a leaky faucet in your kitchen. Initially, you might focus solely on fixing the leak, recognizing it as the primary problem. However, upon closer inspection, you realize that the leaking faucet is just one aspect of a larger plumbing issue. Even if you manage to stop the leak temporarily, the underlying problem remains unresolved, and other issues may arise in the future.

Similarly, while addressing prescription drug prices is undoubtedly crucial, it’s akin to fixing the leaky faucet. It’s a significant concern that demands attention, but it’s not the only challenge facing our healthcare system. There are underlying structural issues that must be addressed to ensure the system’s long-term health and viability.

Simply implementing price controls, like patching a leak, may provide temporary relief, but it fails to address the root causes of healthcare affordability and accessibility issues.

While the bill may be well intended, we’ve seen the impacts that price controls on prescription drugs have had in places like Japan, where the community lacks access to 143 drugs. The Japanese government forces price reductions every few years, making it difficult for drug companies to make the money back that they invested.

These predictable consequences will inadvertently stifle innovation in the US and limit patient access to novel and life-saving therapies.

Lombardo’s Veto of AB250

Gov. Lombardo’s veto of AB250 doesn’t come as a shock.

In his veto message, Lombardo said the bill “would set arbitrary price caps in Nevada based on federal decisions with no review or consideration from state stakeholders.” He argued that “caps could restrict patients’ access to medicines and result in less innovative treatments for patients.”

He’s emphasized the importance of market dynamics such as research and development costs, competition, and more, in determining prices. If we forget to take these dynamics into account, we could lose out on the beauty that comes with allowing the market to do what is natural and create a sustainable healthcare system that benefits everyone.

Supply and Demand

When governments get involved in the law of supply and demand, it is a stark reminder that some things are unnecessary.

The veto upholds the way business is run: supply and demand should control prices not the government and it encourages innovation in Nevada’s healthcare sector.

Attempts to manipulate the law of supply and demand might create temporary illusions of control. Still, in the end, the market will assert its authority. By rejecting price controls, Gov. Lombardo aims to preserve incentives for pharmaceutical companies to invest in research and development, ultimately benefiting patients and promoting economic growth in the state.

What’s at Stake with AB250?

Overturning the veto and implementing price controls on prescription drugs could harm Nevada’s healthcare system. We could see shortages, reduced investments in new treatments, and inefficiencies in drug distribution.

The Pharmaceutical Industry Labor-Management Association said, on average, a new medicine that goes to market costs $2.6 billion and takes ten years to go through research and development.

AB 250 mistakenly uses Medicare’s MFP, a concept created in the IRA. However, MFPs are like regular price references of fair benchmarks. They are prices manufacturers have to offer to Medicare patients, or they could face penalties. That penalty could include not being allowed to do business with Medicare and Medicaid ever again. It’s like if you want to join your gym but didn’t want to pay the price for membership, welp you’re out luck on getting that new beach bod for the summer. At least, without your new gym’s help.

Doesn’t sound too fair, does it?

Fair Price, Market Price

The only “fair price” is the market price. It’s crucial role is to help resources find their proper homes, incentivize production, encourage innovation, and keep people first- reflecting consumer preferences and rationing scarce goods where needed.

When we’ve tried to control prices, ration goods, or centrally plan, it always ended in disappointment, and sometimes, someone being left out or forced to choose what others deem as fair. It’s a reminder that tampering with the natural flow of supply and demand just doesn’t work.

Implementing price controls isn’t just about economics; it’s about our well-being. Price caps could disrupt our local healthcare system, hamper medical breakthroughs, and even put our neighbors out of work. Protecting your community’s prosperity and ensuring that innovation continues to thrive could be the very thing that helps when you or a loved one falls ill and needs medical care and prescriptions.

What You Can Do

The free market, devoid of excessive government intervention, fosters competition, drives innovation, and ultimately leads to better outcomes for consumers. Governor Lombardo’s decision to veto AB 250 aligns with this belief. If you too want a healthcare system that is committed to providing all its community members with options and market-driven solutions that drive down the costs of your prescriptions do your part catch the baton that the governor is passing in vetoing AB 250.

Take Action

Your voice matters. Through your active engagement with elected officials and participation in the democratic process, you can help shape policies that benefit the well-being of all Nevadans.

Here’s your chance to be a part of that process. Write a letter to your legislator demanding them to respect Gov. Lombardo’s reasons for vetoing AB250.