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Speaker of the House Nancy Pelosi’s recently unveiled drug pricing legislation, H.R. 3, would restrict and fundamentally change how patients access medicines in the United States. It would threaten our country’s global leadership in developing innovative, lifesaving treatments, and cures. At the same time, it would force patients to face the uncertainty of a health care system where the government sets prices for critical medicines and imports foreign determinations of the value of those medicines. Such a system allows the government to dictate which disease areas are worthy of future research and represents a de facto nationalization of the innovative biopharmaceutical industry.
Here are four ways Pelosi’s plan is the wrong approach for patients, the U.S. health care system, and American innovation.
- It drastically chills investment in R&D. Recent analysis finds the Pelosi plan would siphon more than $1 trillion from biopharmaceutical innovators over 10 years. And a new analysis from the California Life Sciences Association (CLSA) and Biocom shows this plan could reduce the number of new medicines brought to market by up to 88% in California alone. Smaller biotech companies are especially concerned about the negative impacts of this bill. This drastic cut would jeopardize the almost $100 billion biopharmaceutical companies invest annually in R&D and eliminate hope for patients waiting for new cures and treatments. It would erode incentives that are critical to support investment into the risky and uncertain R&D process for complex diseases such as Alzheimer’s Disease.
- It imposes price setting, not negotiation. Far from negotiation, this plan would instead give the government unprecedented authority to set prices for medicine in both public and private markets. Prices for selected innovative medicines would be limited to the average amount that six countries (Australia, Canada, France, Germany, Japan, and the United Kingdom) pay plus 20% and no more. If biopharmaceutical companies do not meet this new price, the government can force companies to pay a massive excise tax of as much as 95% of the gross sales for the medicine. Government sets the price and biopharmaceutical companies comply or face a tax that is almost the full cost of the medicine – how is that negotiation?
- It imports access-restricting policies. In countries that use international reference pricing and other government price controls as proposed in Pelosi’s plan, patients face significant restrictions in accessing new medicines and treatment options. That’s a fact. Research demonstrates just how drastically government price setting reduces access for patients and results in fewer or delayed treatment options. For example, nearly 90% of new medicines launched since 2011 are available in the United States compared to just 50% in France, 36% in Australia, and 46% in Canada.
- It puts American jobs at risk.The biopharmaceutical sector directly employs more than 800,000 workers in the United States, with workers’ average compensation more than twice the national average across all industries. And because of its large supply chain, U.S. biopharmaceutical jobs have a high multiplier effect resulting in the industry supporting a total of more than 4 million jobs across the economy. Those jobs are put at grave risk under this plan and its devastating impact on the economy. If implemented, Pelosi’s plan is projected to cause the permanent loss of nearly 1 million U.S. jobs.
Instead of blowing up the current system, policymakers should pursue practical, bipartisan solutions that prioritize lowering out-of-pocket costs for patients. Congress should make targeted changes to our system such as sharing negotiated savings with patients at the pharmacy counter, lowering coinsurance and smoothing out cost sharing in Medicare Part D, increasing transparency on costs for patients, and promoting value-based payment. Read more about PhRMA’s solutions, outlined in a recent STAT First Opinion piece here.