Tepp founder, as well as, president of Sentinel Worldwide & Professor in Law at George Washington University Law School. The Trump administration claims its latest drug pricing proposal will be a boon for patients struggling to afford their medications. Unfortunately, this isn’t the case.
The plan which was proposed by the Branch of Health and Human Services would impose price controls on complex medicines covered through Medicare. Like all price control schemes, the move would backfire; sacrificing patients’ access to lifesaving medications and undermining future innovation, all to pinch a few extra pennies in the short term.
Critics point out that other developed nations pay significantly less for medicines. But there’s an important reason for this price discrepancy. When it comes to medical innovation, you get what you pay for.
Because U.S. drug prices are determined by the market, drug companies actively seek to introduce their products in the United States first. Patients in the United States had access to nearly twice as many new medicines as patients in Japan, Canada, and France between 2011 and 2017.
This administration has made it a priority to rectify those unfair practices through trade policy. Officials appear to have succeeded with the United States-Mexico-Canada Agreement, which would require significant improvements to our neighbors’ intellectual property laws.
HHS’ new proposal comes in stark contrast to that common sense policy. Instead of getting other countries to pay their fair share, the United States would cave to their tactics.
Under the proposed plan, Medicare drug prices would no longer be set through negotiation, as they are now. Instead, Medicare would fix reimbursements at a percentage of the average price paid by certain foreign governments.
If the government can simply dictate artificially low prices, it won’t allow companies the same opportunity to recoup their development costs and deliver a return for investors. As a result, investors will flee to less risky industries. This would jeopardize the 4,000 therapies currently in development in the United States for cancer, Alzheimer’s, diabetes and other debilitating diseases — along with future research projects.
High healthcare costs deserve serious attention. But the solution needs to be holistic. It should be approached with an appreciation of the need for pro-growth, pro-innovation policies that offer us not only a future we can afford but one that is better than today.