Opinion: Trump's drug pricing plan is wrong for Michigan, U.S.

Kent Kaiser

The Trump administration has been toying with the idea of implementing an international pricing index (IPI) model for Medicare Part B drugs and biologicals. The ostensible goal of the model would be to lower drug prices. This supposedly would be accomplished by pegging the price that the Medicare system pays for drugs to a level closer to the prices paid in a collection of other countries.

The IPI model represents bad public policy and poor negotiation: It abdicates all responsibility for market negotiation in favor of adopting the vagaries of foreign countries’ economic and pricing policies. The problem is that the comparison countries have warped prescription drug markets with socialist price controls. 

President Donald Trump delivers his State of the Union address to a joint session of Congress in the House Chamber on Capitol Hill in Washington, Tuesday, Feb. 4, 2020, as Vice President Mike Pence applauds.

In the State of the Union address, President Donald Trump said, “We will never let socialism destroy American health care.” Yet the IPI model would be a step in that exact direction.

The IPI model would be imposed on a large share of physicians and hospitals nationwide. By extension, these providers’ patients would be forced to adhere to the price-controlled model, too. This would reduce reimbursement for these hospitals and physicians’ practices which, could force many of them to close and consolidate with larger health systems thus making health care less accessible. This could be especially bad for rural Michiganians who stand to lose access to medical facilities. 

In short, the IPI model would restrict patient access to lifesaving drugs. Of the 27 drugs the Trump administration itself examined, only 41% were universally available in 16 comparison countries. Ninety-five percent of new cancer drugs are available in the United States; only 55% in the comparison countries. The average lag between the time cancer drugs are available in the U.S. compared to elsewhere is 17 months. 

It should be obvious to any observer of global health care policy that socialist price controls are harmful to patients and would be harmful to the American economy. 

Why would Americans, especially Michigan residents who are accustomed to receiving excellent health care, want to be like those foreign countries where people suffer without proper medications and die early because they lack lifesaving medicines?

The best way to lower consumer drug prices is to encourage a competitive marketplace, not to impose more government intervention in drug pricing. Improving approval processes at the FDA would enable drugs to enter the marketplace faster. It currently takes a decade or more to obtain FDA approval for new drugs and generics and costs billions of dollars to obtain the data necessary to obtain approval.

Particularly regarding biologic drugs like gene therapies, which are extraordinarily difficult to invent and cost billions of dollars to develop, the disincentives to development would result in vital drug therapies being unavailable — indeed undiscovered. In addition to providing life-saving drugs for patients, America’s current competitive pricing structure encourages research and development and thus benefits universities and other research organizations that are working to discover new drugs.

The IPI model is the wrong approach to addressing health care costs, and Michigan residents should reject the idea.

Kent Kaiser is a senior adviser for the Trade Alliance to Promote Prosperity.