Skip to comments.House Drug Pricing Bill Could Keep 100 Lifesaving Drugs from American Patients
Posted on 12/03/2019 10:40:31 AM PST by ransomnote
The Trump Administration is committed to lowering prescription drug prices while encouraging medical innovation to help patients access new lifesaving drugs. H.R. 3, the Lower Drug Costs Now Act of 2019, may share the Trump Administrations first goal of lowering prices, but the threat it poses to continued medical innovation will harm American patients in ways that far outweigh any benefits.
H.R. 3 aims to lower prices for select drugs by effectively forcing drug manufacturers to accept prices set by the Secretary of Health and Human Servicesor otherwise face an excise tax of up to 95 percent of sales. This tax would not be deductible for income tax calculations, so drug manufacturers could lose money from selling the drug. Consequently, manufacturers would either have to accept the Secretarys price for a given drug or decline to sell it in the United States.
The Council of Economic Advisers (CEA) estimates that H.R. 3 could lead to as many as 100 fewer drugs entering the United States market over the next decade, or about one-third of the total number of drugs expected to enter the market during that time. CEA also estimates that by limiting access to lifesaving drugs, H.R. 3 would reduce Americans average life expectancy by about four monthsnearly one-quarter of the projected gains in life expectancy over the next decade.
Furthermore, the economic value of this loss of new, better drugs, and the resulting worse health outcomes, could reach $1 trillion per year over the next decade. That is far larger than H.R. 3s projected savings.
Even supporters of the bill have conceded its potential harmful effects on drug innovation. The Congressional Budget Office acknowledges these effects, and suggests that the bill would result in 8 to 15 fewer drugs coming to market over the next decade. However, CBO does not reveal its methodology for making this assessment, and the studies it cites argue for a much larger reduction in the number of new drugs coming to market. Another study suggesting the bill would have a minor impact on innovation assumes that pharmaceutical firms and markets do not respond to profitability changes when deciding how to invest, and also ignores the role that small biotech firms play in pharmaceutical innovation.
CBOs assessment suggests that H.R. 3 could reduce pharmaceutical company revenues by $500 billion to $1 trillion over the next decade, which would have noticeable negative effects on drug innovation. Since pharmaceutical companies typically spend 15 percent to 20 percent of their revenue on research and development, this revenue decrease would probably result in a $75 billion to $200 billion reduction in research and development expenditures over the next decade. For comparison, CEA conservatively assumes the cost of developing a new drug to be $2 billion, which explains how CEA reached the estimate that H.R. 3 could result in as many as 100 fewer drugs entering the market over the next decade.
CEAs estimates are at the low end of the damage caused by H.R. 3. For example, in its assessment of the bill, CBO cites a study that finds that increasing the potential size of the drug market by $2.5 billion in revenue is associated with one new drug. Based on the CBOs preliminary analysis of a projected $500 billion to $1 trillion revenue decline over the next decade, this study suggests 200 to 400 fewer drugs will enter the market, far larger than CEAs estimate. Other studies cited by CBO suggest even larger harmful effects.
Reducing the number of new drugs by one-third over the next decade would have substantial negative effects on Americans health. To value the economic costs from these negative health effects, it is estimated that spending $2,000 on pharmaceutical research and development increases population health by one statistical life-year. This means that H.R. 3 would reduce population health by 37.5 million to 100 million life years over the next decade. In other words, H.R. 3 would reduce Americans average life expectancy by about four months.
As another way of showing the bills costs, H.R. 3 would save the Government an average of $34.5 billion per year over the next decade. Using standard methods of valuing health gains, CEA estimates that the economic value of the bills resulting reduction in health outcomes ranges from $375 billion to $1 trillion per year over the next decade. This means that H.R. 3s long-term health costs are at least 10 times larger than the short-term savings to the Federal Government.
The Trump Administrations commitment to reducing drug prices through market-based mechanisms, such as approving new generics and removing barriers to drug innovation, has provided Americans with the largest and longest drop in drug prices in over five decades. Lowering the price of prescription drugs is rightly a major concern for American patients and policymakers, but H.R. 3 is the wrong approach to address a pressing problemespecially when bipartisan legislative alternatives that encourage innovation while lowering prescription drug prices are gaining support in Congress.
Heavy-handed government intervention may reduce drug prices in the short term, but these savings are not worth the long-term cost of American patients losing access to new lifesaving treatments.
The customary effect of government interference: the kiss of death for free enterprise and beneficial innovation.
Price fixing. A communists dream.
The issue here is not price, innovation or availability.
The issue is a government with the power to destroy an entire market sector of an advanced economy.
The US is 6% of the world’s population and about 14% of the world’s economy.
What our national government pays for drugs really isn’t all that important in terms of repaying drug development.
The drug companies need to take their talking points to Paris, Berlin, Tokyo and most importantly, Beijing.
China may be as much as 35% of the world’s economy by the time a newly drug project bears commercial fruit.
This is from my PPACA modification proposal of late 2017, which I wish to maintain my copyrights to in general, but the following may be freely copied:
[This is drug coverage stuff.
[These are not price controls. A plan is not prevented from paying $1 million for a single aspirin by this subsection.
[These levels merely indicate the price levels at which a drug company (or a patient’s doctor) has to ask the plan
[ for permission to dip into the plan’s bank account (and enrollees’ wallets and purses).
(6) BASIC PRICE LEVEL.-A basic price level plan must contractually cover, as medically indicated and prescribed,
as per generally reasonable plan formulary, prior authorization and step therapy rules,
with rights of appeal as provided by applicable law and the plan,
prescription drug products authorized for US patient use under US federal law
by the US Food and Drug Administration prior to the year prior to the calendar year of the plan,
up to 120% of their equivalent Canadian maximum price at a $1CDN=$1US conversion rate,
if such a price has been officially proclaimed by the Canadian Patented Medicine Prices Review Board, or
the upper limit, based solely on the most essential drug molecular type of the product, for the following molecular types:
(A) GENERIC CHEMICAL.-,
(I) $20, 30-day supply,
(II) $50, 90-day/course supply,
(B) PATENTED CHEMICAL.-,
(I) FDA-designated breakthrough or orphan drug-,
(ii) use normally less than 91 days, $50/day of supply,
(ii) use normally less than one year and greater than 90 days, $20/day of supply,
(iii) use normally at least one year, $300/30-day supply,
(II) not an FDA-designated breakthrough or orphan drug-,
(aa) other in chemical class or USP classification,
(i) $40/30-day supply,
(ii) $100 90-day/course supply,
(bb) no other in USP classification or chemical class,
(i) $100/30-day supply,
(ii) $250 90-day/course supply,
(C) LARGE VOLUME RECOMBINANT.-,
(I) normally one occasion use for any patient[clot-buster], $2,500/occasion,
(II) possible substitute for patient’s ICD-9 condition, $20/treatment activity day, up to 365,
(III) no possible substitute for patient’s ICD-9 condition, $40/treatment activity day, up to 365,
(D) SMALL VOLUME RECOMBINANT.-,
(I) patient specific recombinant molecule, $100/treatment activity day, up to 365.
(II) no possible substitute for patient’s ICD-9 condition, $80/treatment activity day, up to 365,
(III) possible substitute for patient’s ICD-9 condition, $60/treatment activity day, up to 365,
(IV) normally one occasion use for any patient[anti-venom], $5,000/occasion.
Well, Mister President, VETO the damn thing when it hits your desk.
“The issue is a government with the power to destroy an entire market sector of an advanced economy.”
Most expensive new prescription drugs are generally not market economy products.
A drug priced at $1 million for a needy person might not get a single market economy buyer.
Well, Mister President, VETO the damn thing when it hits your desk.
I am sure he will and then the MSM will claim he just killed a bill that would help Americans. All the way up to presenting the bill to the POTUS, Dems and MSMs shriek it will save us all. The fact that it’s a bad bill can’t get enough air time. So POTUS rejects it and the MSM and Dems work to convince the public POTUS would rather citizens die than sign a sheet of paper. Whitehouse.gov is one of the very few places the truth comes out.
$100/year/patient - uh!
$1,000/year/patient - uhh!
$10,000/year/patient - UHH!
$100,000/year/patient - Not affordable for the national government!
$1,000,000/year/patient - This will not be tolerated by the national government!
Trump has asked the drug industry for lower drug prices.
Reform as Trump is expecting or reform the Bernie Sanders way!
I’m 61 years of age. I have never taken a drug that is currently under federal exclusivity.
What I care most about is affordable access to medical care and products that are now decades old.
I may not sign up for Medicare Part B or Part D.
I believe the government needs to get Part B and Part D prices under control.
I don’t know that the situation you cite is a rational one for government to take.
When we collectively spend $1mil (a month or year) for a drug that has no market, we ensure any such collective cannot survive.
Companies will not sell products they cannot make money from.
Government price setting is death to the U.S. If you want to look into li.iting patents to a few years , yes. ut price fixing is socialism. the drug companies will find another business or move overseas.
Plan D is a choice.
I am far from Anarchist but I absolutely HATE government. A limited government of good governance is history.
More tyranny of government.
With Mark Levin, I’m highly skeptical of government price controls on drugs. On the other hand, as the largest paying customer for drugs (via Medicare and the VA), the government should bargain with pharma to keep costs down for the end consumer. And if Medicare decides that it’s not willing to pay $1M/day to keep someone alive, I’m good with that. That someone still has the “right” (if not likely the ability) to pay it themselves.
Part A is given. Part B you have to pay for. Its not mandatory until you start taking your Social Security and then they will take it out of your check
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