Included is a big change to Medicare that would profoundly disrupt the development of new treatments and cures. The change would allow federal officials to "negotiate" drug prices with pharmaceutical companies.
The effort sounds innocuous and has obvious appeal. Who could object to negotiations?
But while lawmakers are marketing their measure as pro-patient, the fine print shows it's not. The bill may reduce some government spending, as is the goal. Yet patients will lose access to many of today's medicines and virtually all of those yet to be created.
The legislation dictates the maximum price Medicare will pay for at least 20 popular drugs over the next seven years — and we can assume that would be just the start, once policymakers come to see their shiny new law as a piggy bank for other causes.
And while compliance is supposedly voluntary, manufacturers who refuse to accept the government's terms will face a punitive tax that rises to a whopping 95% of gross sales, plus additional penalties for drug companies who sell their products above the mandated price. Walking away from the Medicare market isn't an option either, given that it serves more than 60 million people. In other words, the government won't be "negotiating" with companies at all.
These proposals would slash revenue at pharmaceutical companies. At first glance, some may not have much problem with that. The rub is that their revenue funds the majority of drug research and development in the United States, and indeed around the world.
Pharmaceutical innovation is inherently risky. Taking into account potentially promising new compounds that don't pan out during development, the average investment required to get a new medication approved is $2.6 billion. Only about 12% of potential new biopharmaceutical treatments that enter clinical trials ultimately get through approval and make it to market.
Small biotech firms, especially startups, would be especially hard hit by the proposed legislation. Since price controls would effectively rule out the possibility of making a return on popular and important drugs, these businesses would struggle to attract investors.
Legislators only settled on the details of the current bill in November, but analysts have carefully evaluated several earlier, similar versions of their price control proposal. One comparable bill would have reduced total revenue to biopharmaceutical companies by at least $102 billion per year, according to health consultancy Vital Transformation. And a University of Chicago study concluded that the same bill could lead to 342 fewer new drugs over the next two decades — a reduction of 65%.
Just like that, the pipeline of medical innovation would close. The real cost of this so-called reform would be paid in poor health and lost lives in the future. Yet Congress continues to push its drug-pricing measures as though it were a gift to patients and caregivers.
At my organization, Caregiver Action Network, we know just how much difference new and improved treatments can make. That's precisely why we, and so many other patient advocacy organizations, are adamantly opposed to this ill-considered plan to introduce price controls.
As a nation, we can't afford to stop funding research into treatments for cancer, Alzheimer's, Parkinson's, and other devastating diseases. I urge lawmakers to stop portraying this legislation as helpful to patients and their loved ones, as they're the ones who will undoubtedly suffer.
John Schall is CEO of Caregiver Action Network.