Democratic lawmakers are playing a dangerous game with the lives of seniors as they pursue drug pricing schemes that would put dozens of future medicines out of reach.
A new study from the nonpartisan Congressional Budget Office has found that setting price controls on drugs, as legislators are trying to do in their budget reconciliation bill, could dramatically reduce the number of new medications developed, approved, and brought to market.
As it happens, the CBO projections are likely far too optimistic. If congressional Democrats get their way, they may be able to offer seniors lower prices on some drugs today, but only in exchange for a future in which their children and grandchildren won’t see new drugs at all.
Democrats insist that one bill under consideration, H.R. 3, only allows Medicare to “negotiate” with drug companies about the prices of prescription drugs. But in the real world, the federal government doesn’t negotiate with private businesses. It tells them what to do. And that’s exactly what the sponsors of H.R. 3 and similar bills want: to tell drug companies what to charge. The White House just threw its full support behind this kind of “negotiation.”
H.R. 3 is pitched as a magic wand that Congress can wave to make drugs less expensive. But it promises painful disruptions. If the federal government’s prices are set too far below market rates, the losses drug companies incur would come straight out of research and development.
The average cost of bringing a new prescription medication to market is about $2 billion. If pharmaceutical companies cannot make adequate returns on their investments, they’re going to stop making them.
We all clearly want lower healthcare prices at every level. But those prices must be market-based, realistic, and fair. Any government-based “negotiations” would completely distort the market while simultaneously disrupting the availability and development of new drugs.
In its new study, the CBO estimates that under H.R. 3, at least 60 new therapies and cures would never see the light of day. But that conclusion is almost certainly too conservative. With research budgets slashed, the number of undiscovered cures will grow over time, as the tree of scientific knowledge withers instead of branching. Government price-setting, even with the best of intentions, discourages the kind of high-risk/high-reward research that leads to discovery.
We’ve already seen some kinds of drugs suffer from underinvestment due to a lack of financial incentives. For example, almost no new antibiotics come to market even though we desperately need them to combat superbugs, and several antibiotics startups have filed for bankruptcy in recent years.
Under H.R. 3 or bills like it, many more drug developers would suffer the same fate. The smaller, newer biotech companies that account for a majority of early-stage clinical research would be hit hardest, as they have a more difficult time attracting investment than giant corporations.
A recent study from Avalere, a health consultancy, found that H.R. 3 would slash $1.3 trillion from drugmaker revenues over the next nine years. Lawmakers simply can’t expect to do that without shortening a lot of lives. The cancer, diabetes, and Alzheimer’s cures we’re all hoping for won’t materialize.
Economists classify breakthrough medications for previously incurable diseases under vague categories such as “innovation” and “productivity.” But to suffering patients and their families, new cures feel like miracles — literal matters of life and death. Sacrificing those miracles should be a nonstarter, especially when there are alternative, more popular, much less dangerous ways to lower drug prices.
A June survey of adults by the Kaiser Family Foundation found that 65% oppose federal “negotiations” with drug companies if they would limit access to new prescription drugs or lead to less research and development of new medicines.
Substantial majorities support policies to bring down drug prices by requiring insurance companies to pass prescription drug savings on to customers, lower deductibles, and cap patients’ out-of-pocket expenses. The public understands that sacrificing long-term pharmaceutical research is a scientific, medical, and moral dead end.
People of all ages — that is, the seniors of today and tomorrow — know we won’t enjoy the healthcare of the future if we can’t move beyond the technology of the present.