Posted on 10/27/2020 7:23:32 AM PDT by Kaslin
In a mad scramble to shore up the senior vote before November's election, President Trump recently signed an executive order that would drop Medicare payments for many prescription medicines to the lowest price paid in other developed nations.
Given the haste with which the president crammed through this plan, it should come as no surprise that the policy is myopic at best and downright reckless at worst. Yes, foreign governments pay less for drugs than we do in the United States. But President Trump fails to consider exactly why prices are lower overseas.
Many other countries unilaterally dictate how much drug developers can charge for their therapies. And if companies don't agree to the terms, foreign governments often just ignore the drug patents, authorize a copycat drug, and devalue intellectual property in the process.
Bringing this demonstrably anti-free-market system to the United States would devastate medical innovation to the detriment of both today's and tomorrow's patients.
Here's why. Robust intellectual property rights undergird America's life sciences sector. Investors feel comfortable financing billions of dollars in up-front research and development costs because companies can fairly price any resulting treatments. These companies also know that they can protect their hard work with patents and other IP protections, which give firms a chance to recoup R&D costs and invest in future research.
This system has made America the world leader in biomedical innovation. The United States accounts for nearly 60 percent of global pharmaceutical R&D investment. More than half of the world's new therapies come from U.S. labs. Right now, U.S. scientists are developing more than 4,500 potential treatments for serious conditions ranging from Alzheimer's to diabetes.
It's a far different story in other developed economies that weaken IP protections. In many European nations, the government uses price control measures to suppress drug costs -- and reserves the right to impose compulsory licensing -- opting to use the technology covered by drug patents if companies refuse to accept below-market reimbursements.
Artificially capping drug prices -- through price controls or compulsory licensing -- chills medical innovation. After all, why would drug developers risk upwards of $2.6 billion to bring one new drug to market when the government reserves the right to swoop in and manufacture their cutting-edge innovation at cut-rate prices?
We've already seen aspects of this in Europe. As recently as the 1970s, Europe produced 55 percent of the world's new medicines. But as European politicians ratcheted up price controls and weakened IP protections relative to the United States, investors and scientists moved away from the continent. Consider that a mere 19 percent of pharmaceutical patents issued in 2016 went to E.U.-based drug companies, while U.S. firms claimed 57 percent.
But who's really harmed are the patients. As a result of price controls and compulsory licensing, many companies shy away from entering these markets. Consider that German cancer patients must wait, on average, 11 months before receiving new cancer medicines. Patients in the United Kingdom and Canada wait 12 and 14 months, respectively, for novel oncology drugs.
Meanwhile, American patients can often access new cancer medicines nearly immediately -- waiting zero to two months, on average.
While less expensive drugs for Americans may sound like a great deal in the short term, in the long term, President Trump's order would stymie American medical innovation. Consider that 77 percent of U.S. pharmaceutical companies anticipate reductions in future R&D efforts if reference pricing takes hold. Any policy that kneecaps R&D means future patients would lose out on myriad life-changing -- and life-saving -- therapies.
Whether foreign governments systematically devalue intellectual property through compulsory licensing or artificial price caps, the result is the same: less biomedical innovation, pervasive access delays, and fewer breakthrough therapies.
Americans deserve better. Let's hope Washington reconsiders this misguided policy.
In France, drug companies are free to reject the government suggested price cap (and insurance coverage).
I’d like her to know that I was offered an MS drug that cost $65,000 every six months. Needless to say, I am not taking it. And yes, price was an issue!
I object to theft by taxation to pay drug companies billions via Medicare.
Someday a drug company CEO might wish a cancer drug project wasn’t cancelled.
Drug pricing is a scam. We should be able to buy drugs from external markets. Drugs get monopolies from the US government as well as subsidies. If the drug companies can give France a better deal, we should get that same deal. Between government funded research and down playing drugs that work just fine so that more expensive ones get prescribed, the US citizen overpays for healthcare which is not better than most of the first world outside of the US.
Nice to see that Big Pharma is still able to buy columns on Townhall whenever they want to.
Sure, someone has to pay the R&D costs, but right now it seems the USA is paying the R&D costs for the entire world while everyone else reaps the benefits at very little cost.
There must be a better solution.
Foreign countries are no concern to me.
I am an American, and concerned about American drug prices. Only.
Drug prices are fixed by the companies selling the drug for profit. That is not intellectual property.
Big Pharma will fight Trump for every inch but guaranteed they will bend over for single payer the very first day it arrives. I have no sympathy for these corps. They are, like Fake News, enemies of the people.
This is a price control, and the government does not have the right to set prices, no matter what fancy name is used to describe the process.
Yes, Town Hall been infiltrated with Never Trumpers and rats.
I mean, haven’t we learned out lesson with the Think-Tank Republicans who want to die on the hill of Free Market Uber Alles? They were doing that with Big Tech a decade ago. Look where it got us.
We've been subsidizing socialized medicine in other countries for a very very long time. This was a topic even 30 years ago. It's time we use our market position to force them to pay their fair share of R&D.
You’re wrong about this. The President’s directive applies to Medicare payments. The government is the BUYER of these drugs, so it can set the price it is willing to pay without imposing a “price control.” When the government says it won’t pay more than $X for a drug, it’s no different than you telling Apple that you won’t pay $50,000 for an iPhone.
I notice those attacking Trump's favored nation pricing policy offer no solutions of their own.
How should we (society) pay for MS drugs? It costs from 300 million to 3 billion to develop a new drug. If we got $1000 from every MS patient (a million of those) it would pay for the drug.
I am against subsidizing the rest of the world more than I am against making our prices comparable to what other countries pay for the same thing. In a free market different countries would all pay about the same, no?
I have no doubt about that.
“And if companies don’t agree to the terms, foreign governments often just ignore the drug patents, authorize a copycat drug, and devalue intellectual property in the process.”
Then the US government can deal with these foreign governments through trade policy. But simply allowing this to go on and on is one of the reasons US drug prices are so high.
The author is advocating that the US government continue to turn a blind eye to IP theft (or the threat of it) by foreign governments as a course of action to protect big pharma.
No, it’s MAGA time.
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