Opinion: Pelosi's drug bill has hidden price tag
House Speaker Nancy Pelosi just released a bill that would allows government regulators to set artificially low prices for hundreds of medicines.
These price caps would undoubtedly save the government money. But they would also stifle medical research, making it harder for scientists to cure Alzheimer's and a host of other chronic diseases that currently burden millions of families and threaten to overwhelm the health care system in the coming decades.
Pelosi undoubtedly wants to help patients. She can do so by going back to the drawing board.
The Lower Drug Costs Now Act would impose outright price controls on up to 250 common treatments each year for everything from cancer to multiple sclerosis. For those drugs, the bill would prohibit manufacturers from charging more than 120% of the average price paid in Canada, the United Kingdom, and four other developed countries. If companies don't comply with the policy, they'd face a substantial penalty of 95% of gross revenues from the drug.
Such price controls could save the government a considerable sum in the short run. It's less clear how much of the savings would make it to patients.
But any savings would come at the expense of medical progress. It takes as much as $2.6 billion for research companies to bring one new drug to market.
Consider efforts to find a cure for Alzheimer's disease, which have greatly impacted me and my family. My uncle is now in the final stages of Alzheimer’s disease. Watching such a vibrant, fun-loving, outgoing man disappear by inches without any opportunity for improvement is heartbreaking. As our population ages, millions of other uncles, aunts, parents and grandparents could face similar fates; Alzheimer’s alone threatens to overwhelm our health care system.
Companies have already invested billions in the search for a treatment to alter the progression of Alzheimer’s disease with very limited success.
Sadly, scientists may never find a cure for Alzheimer's if price caps take effect. If the government mandates artificially low drug prices, researchers would struggle to recoup that investment and attract funding for new research projects. Companies might pull the plug on experimental treatments that are already in the development pipeline, thereby depriving patients of new breakthrough medicines.
Only with an environment supportive of medical innovation will America's biopharmaceutical innovators be able to keep trying to find new therapies and cures for deadly diseases like Alzheimer's.
In the long run, price controls could increase costs for both patients and the government. More than 190 million Americans suffer from at least one chronic disease. And that number continues to grow. Over the next decade, chronic diseases could cost patients and taxpayers almost $42 trillion, cumulatively. New cures could revolutionize medicine and reduce overall health spending, but they won't be developed unless companies have market incentives to fund research.
Europe used to dominate drug development. But then, continental leaders embraced ever-stricter price controls that shifted global dominance in pharmaceutical R&D to the United States. Americans now get drugs sooner, have access to more of them, and pay much lower prices for generic medicines than our neighbors in Europe and Canada — all reasons not to throw away our current system for the lure of price controls.
Smart public policies can trim health care costs at the margins. But there are only two ways to substantially slash overall health care spending -- prevent people from getting sick in the first place, or help them manage their conditions to avoid costly hospitalizations and other avoidable care.
Both solutions require new vaccines, treatments, and cures. If researchers discovered a treatment that merely delays the onset of Alzheimer's disease, our health system could save $650 billion within just five years.
All told, new and better medicines could save our health system $6.3 trillion and save 16 million lives by 2030, according to a study by my organization, the Partnership to Fight Chronic Disease.
Though well-intentioned, Pelosi's bill is penny wise and pound-foolish. In exchange for some government savings today, it sacrifices the much needed medical breakthroughs that could save trillions of dollars and millions of lives tomorrow.
Candace DeMatteis is the policy director at the Partnership to Fight Chronic Disease.