After a brief respite, COVID-19 cases are once again on the rise. Many hospitals are swamped with coronavirus patients and pharmacists have their hands full providing an array of medicines to the sick. But one pernicious policy being considered by President Donald Trump would make a host of critical drugs nearly impossible to obtain.
The White House is proposing tethering drug prices to an “international pricing index,” which would lead to rigid price caps, diminished innovation, and shortages in medications that millions of patients rely on every day.
Administration officials should focus on regulatory and rebate reforms to lower prices instead of onerous rules that would backfire spectacularly. Patients deserve real reform, not populist prescriptions that the doctor never ordered.
To some misguided policymakers in the Trump administration, shackling pharmaceuticals to international, government-determined prices is a cure-all for high drug costs. At the end of 2018, the Department of Health and Human Services proposed a rule that would tether Medicare Part B drug payments to an average of the prices charged in other developed nations.
The Centers for Medicare & Medicaid Services (CMS) notes that pharmaceutical spending in the U.S. is 1.8 times higher than the average of sixteen other industrialized countries (e.g. Finland, France, Germany), and argues that continued high costs in the U.S. “may pose a barrier to providers furnishing … therapies and beneficiaries receiving treatment.”
But in their rush to enact price controls, policymakers and administration officials haven’t bothered to examine the experience of countries that have set prices artificially low. The experience across the pond hasn’t been pretty as doctors and patients in Europe report difficulties obtaining needed medications.
For example, in 2019, more than 30 percent of European pharmacists had problems obtaining heart disease medications for patients with high cholesterol.
As a result of these high hurdles, European doctors think twice before prescribing patients statins. According to European Society of Cardiology (ESC) board member Ian Graham: “The American approach would mean considerably more people in Europe being on a statin.” The U.S. model may not be perfect, but basic medications proven to help prevent chronic ailments such as heart disease are readily available to American patients.
That’s not to say, though, that policymakers can’t do more to expand affordability and availability to cutting-edge medications and therapies. The cost to bring a medication to market exceeds $2 billion, thanks in large part to expansive Food and Drug Administration (FDA) rules. According to an analysis by Boston College and Massachusetts Institute of Technology researchers, the FDA is far too risk averse in approving drugs for some of the deadliest diseases impacting patients.
Though the agency seems to be loosening up to accommodate COVID-19 breakthroughs, far more work needs to be done to lessen costs for patients. As detailed in the Taxpayer Protection Alliance’s 2019 report on FDA reform, the agency’s statistical thresholds make it difficult for a drug to be approved even if there’s a 90 percent chance that the medication’s benefits are for real.
Even a mild relaxation of these statistical requirements could lead to life-saving drugs hitting the market sooner at a fraction of status-quo costs.
The Trump administration and lawmakers should also take a long, hard look at how the current, convoluted system of drug rebates and middlemen keeps drug prices high. Pharmacy Benefit Managers (PBMs) typically secure discounts on pharmaceuticals but fail to pass along savings to consumers, resulting in patients and taxpayers (via Medicare and state Medicaid plans) paying unnecessarily high prices.
Clearly, the status-quo isn’t working to keep prices under control and quickly deliver medications to ailing Americans. And now, the Trump administration may make this situation even worse — at the worst possible time. It’s time for our elected leaders to reject price fixing and tethering. The real solution is addressing the regulatory malpractice at the root of these issues.
Undermining drug innovation and availability at a time of COVID-19 uncertainty is a gamble that Americans cannot afford.
Ross Marchand is the vice president of policy for the Taxpayers Protection Alliance