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A Harmful Path on Drug Pricing

You may have seen in the news last week that the majority leadership in the U.S. House of Representatives had decided to make prescription drug affordability a priority and introduced new legislation that they say will reduce what you’re paying for medicine.

Well, it’s not exactly new legislation.  It’s actually the same bill that the House passed in 2019 but that didn’t receive action in the then-Republican Senate.  H.R. 3 was a bad idea then and it remains a bad idea now.

H.R. 3 is a piece of legislation that would fundamentally change the way we determine pharmaceutical pricing in the United States. It would replace our market-based approach that utilizes private sector negotiations with a much heavier regulatory hand and a reliance on the government price controls used in other countries.

The sponsors of H.R. 3 talk almost exclusively about reducing prices, but they don’t address the consequences of their approach. The Congressional Budget Office has said that there will be fewer new medicines developed over the next 20 years if this government-centered philosophy toward pricing becomes the law of the land.  We shouldn’t have to choose between lifesaving medical progress and an unproven pricing method.

I want to focus on two of the primary components of H.R. 3. One provision would use the prices of six other countries as a baseline to determine the U.S. price for many drugs in the Medicare Part B (which covers drugs injected or infused in healthcare settings) program. Another would empower the Secretary of Health and Human Services to “negotiate” prices in the Medicare Part D program that millions of seniors use for their prescription drug coverage.

Let’s put all of the rhetoric aside and deal with the facts.  There are three reasons why this legislation would be bad for seniors:

  1. The notion that we should base our prescription drug prices on six countries – Germany, the United Kingdom, France, Canada, Japan, and Australia – whose healthcare systems are fundamentally different than ours is incomprehensible. Because the United States is the world’s hotbed of biopharmaceutical innovation, we have more access to new medicines than citizens in those countries.  For example, 96 percent of new cancer drugs developed in the last decade are available to Americans.  In Australia, only 49 percent of those drugs are available.  Yes, our government should be tougher in pressing those countries to pay their fair share for medical innovation, but we shouldn’t undermine our system in order to emulate theirs.

  2. Giving the Secretary of Health and Human Services “authority” to negotiate Medicare Part D drug prices is a flawed premise.  Government doesn’t negotiate, it sets prices.  This is a solution in search of a problem.  Medicare Part D average monthly premiums have remained steady and affordable for several years now.  Medicare Part B average prices aren’t going up any faster than any other commodity in healthcare. Private sector negotiations are working.  Why throw that out for government price setting that could have severe ramifications for our access to drugs?

  3. COVID-19 has taught us that we need a robust innovative pharmaceutical sector that can produce breakthrough vaccines, treatments, and cures.  HR 3 would take $1.5 trillion out of this industry over the next decade.  As I mentioned earlier, CBO says this would result in dozens of fewer new medicines being produced. At a time in which we’ve seen the rapid production of COVID-19 vaccines and we need more, not less, research and development to fight cancer, Alzheimer’s, diabetes, future infectious viruses and other diseases, undermining innovation would be a terrible direction to go.

There are ways Congress can pursue greater affordability that don’t involve these terrible consequences.  Keep an eye on this battle that will be unfolding over the upcoming months and make sure your Senators and Representatives hear your opinions on the matter.



2 Comments On “A Harmful Path on Drug Pricing

  1. Alphonsus Roche

    I am not on Medicare “D” but have an insurance plan that pays my meds shouldn’t all plans get benefits of lower cost

    1. Thair Phillips

      Alphonsus – Great question! Some of the proposals that have been put forth could have an effect on private insurance, it isn’t clear yet if there will be significant savings in Medicare and if there is, if any of those savings will be reflected in the private insurance marketplace. What we do know is, if government price fixing is instituted, the reduction in the discovery of new medicines will affect everybody. We are at the cusp of a golden age of discovery for new medicines and cures, now is not the time to choke off this important research.
      Best, Thair

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