So, what would the new regulations do? If they are implemented, according to National Review’s Jeff Zymeri, drug development will drop off: “The CBO has predicted that the scheme provided for under the IRA would lead to a manufacturer-revenue loss of 15 percent. Such a cut in CBO’s predicted 45 new drugs per year would suggest around 6.8 fewer drugs per year, totaling around 121 lost over the 18-year horizon, as one report estimated.” The drugs most likely to disappear would be drugs that target rare conditions, and thus have less of a market.

As an investor in biotech stock, I can say with confidence that investment will shift out of the sector and into other, freer sectors should the Biden administration move to quash profit margins in the sector. Why would investors sink money into a drug, only to find out that the more successful it is, the less profit there will be in it?

[And that’s just the straightforward outcomes under these new incentives. The “negotiation” itself is nothing more than extortion to force pharmas to accept price caps. I wrote about it yesterday for VIP members. — Ed]