Trust Ted Cruz, Not Lina Kahn, on Drug Pricing Reform!

When a boss is running a toxic workplace, hierarchical superiors are the ones who have to reign in such behavior. What they must not do is give such a leader any additional powers. That would be a setup for disaster.

So, it isn’t clear why legislators in Congress would want to give more power to the reckless Lina Khan and the Federal Trade Commission she runs.

Nevertheless, some lawmakers are, in fact, trying to expand the FTC’s power.

The Senate recently held a hearing to discuss the Pharmacy Benefit Manager (PBM) Transparency Act, S. 127. The goal of the law is laudable: to make prescription drugs more affordable. Unfortunately, the legislation is just political theater.

There’s little reason to believe greater government involvement in PBMs, which health plans use to negotiate with (and secure savings from) drug manufacturers, is in consumers’ interest. At the hearing, Sen. Cruz pointed out “the FTC has previously conducted robust economic analysis of PBMs and found that PBMs benefit consumers by lowering drug prices.”


How big are the savings PBMs provide? Some $145 billion, according to Casey Mulligan, a Professor in Economics at the University of Chicago and a former chief economist in President Donald Trump’s Council of Economic Advisers.

In a study for the National Bureau of Economic Research, he wrote that “PBM services expand the economic pie in prescription markets while redistributing from manufacturers and pharmacies to consumers,” fueling competition and lowering retail and manufacturing prices.

However, even if the bill looked good on paper (which it doesn’t), why would Republicans in Congress ever support an initiative to give Lina Kahn and the Biden FTC more power?

That’s exactly what the PBM Transparency Act would do. It would allow the FTC to intercede in business-to-business contracts — even contracts that health plans make with groups that have the scale needed to stand toe to toe with big drug companies.

Sen. Cruz said that “it seems the FTC has become a ‘catch-all’ agency that Congress and the White House can use to regulate complex markets like prescription drugs or gas prices even when those markets might be reflecting problems caused by other government policies.”

He’s right; and making matters worse is the fact that the FTC under Khan is a disaster. Americans for Tax Reform has already called her out for “[taking]aim at numerous industries including agriculture, health, telecommunications, and technology companies.”

Two FTC commissioners have criticized her “disturbing trend of pulling the rug out under from honest businesses and the lawyers who advise them, with no explanation and no sound basis.”

As for the workplace Khan herself runs, her actions are forcing other commissioners to leave. Last month, Commissioner Christine Wilson wrote in The Wall Street Journal that she resigned because of Lina Kahn’s “continuing lawlessness” despite the countless hours Wilson and her staff spent “seeking to uncover her abuses of government power.”

Wilson is not alone in observing that the commission is in disarray. “Hundreds of FTC employees respond annually to the Federal Employee Viewpoint Survey,” she wrote. “In 2020, the last year under Trump appointees, 87% of surveyed FTC employees agreed that senior agency officials maintain high standards of honesty and integrity. Today that share stands at 49%.”

The U.S. Chamber of Commerce wrote that under Khan, the “FTC is overstepping its regulatory authority, undermining our system of checks and balances, ignoring due process, and bypassing longstanding regulatory norms to expansively regulate industries and manage our economy with a government knows best approach.”

That isn’t the way to lower drug costs.

Lawmakers ought to hold hearings about stopping Lina Khan’s abuses instead of trying to give her more power. They could also investigate ways to reduce government distortions and inefficiencies throughout the health and pharmaceutical industries.

That would be a useful exercise — far more useful than granting one of the worst Biden appointees to date more control over our economy and lives.


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