Debate over how to lower healthcare costs has intensified as policymakers consider price controls and new regulations on pharmaceuticals. Critics warn those efforts could undermine innovation and limit access to future treatments.
Isabel Marchese, director of health policy at Americans for Tax Reform, says many of these proposals risk doing more harm than good.
Marchese argues that rising healthcare costs stem in part from distorted market dynamics. “People aren't connected to the cost of healthcare,” she says. “In so many ways, we're subverting the natural order of supply and demand in health care, and that all contributes to the increase in cost.” She points to government intervention as a driver of those distortions, adding that increased demand without corresponding supply growth inevitably raises prices.
Policy debates over drug pricing are at the center of her work. Marchese criticizes recent efforts to impose price controls, including provisions in federal law that allow government negotiation backed by heavy penalties. She says those policies already show measurable effects. “That’s led to a 70% decline in small molecule research,” she says, warning that long-term consequences include “135 fewer drugs over the course of the next several years.”
Innovation, according to her, depends on the ability of companies to recover massive upfront investments. “The average drug takes 12 to 15 years to develop. It will cost companies roughly $2.6 billion per drug,” she says. “When you basically guarantee that they won't be able to recoup that amount… they're not going to do it.” She emphasizes that the true cost of price controls is often invisible. “When we can't see the cost in future drugs not happening… nobody can really understand the gravity of that cost.”
Public understanding of the issue remains limited, according to Marchese. She says it is difficult to grasp delayed benefits like generic drugs. “Expensive drugs yesterday will become something easily accessible to you,” she says, pointing to real-world examples where prices drop dramatically once patents expire. Without that cycle, she says, “pharmaceutical companies would have never made that life saving, life preserving drug in the first place.”
Marchese also raises concerns about ideological inconsistency in current policy debates. “I think it's a huge problem on the right right now,” she says. “People wanted to just use all the tools at their disposal… to take hold of popular positions.” She warns that adopting policies like price controls for short-term gain risks undermining long-term arguments. “The next time they want to call out a Democrat… they'll be like, well, you supported price controls here.”
Beyond drug pricing, she highlights health savings accounts as a key reform. “They reduce the cost of health care by about 11% for users,” she says, explaining that consumers spend more carefully when using their own funds. “It's their money of theirs that's tangible… so they're cognizant of how much money they're spending. And that naturally drives prices lower.” She supports expanding HSAs further to increase consumer choice and cost awareness.
Tariffs on pharmaceuticals represent another concern. Marchese says recent policies risk raising costs while failing to achieve broader goals. “None of these hammer-fisted solutions come without costs,” she says, arguing that policymakers should instead focus on domestic production and deregulation. “We should be streamlining production here… incentivizing companies to have their manufacturing here and to give us better deals.”
Marchese acknowledges legitimate concerns about international pricing disparities but rejects coercive solutions. “The free rider problem is a real one,” she says, though she adds that foreign governments often limit what companies can charge. “We're overestimating their ability to raise prices,” she says, noting that some countries can impose severe penalties or seize intellectual property.
Healthcare costs, she says, will not fall through mandates alone. “We also should come to the table with solutions for people,” she says, pointing to market-based reforms that encourage innovation while giving consumers more control over spending.
