The California Life Sciences Association believes that increased patient costs are a critical problem that must be addressed. If one patient can’t afford medicines, that is one patient too many.
However, we are gravely concerned about growing bipartisan support for importing foreign price controls. Both the Trump administration and Sen. Kamala Harris’ (D-Calif.) presidential campaign have proposed foreign price controls to lower drug costs. While the proposals differ in significant ways, importing foreign price controls will do little to lessen the financial burden for patients. Rather, these short-sighted proposals will hinder access to needed treatments and discourage medical innovation.
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Both plans miss the mark for a number of reasons and would harm the nation’s life sciences sector, especially in California, which employs about 18 percent of the U.S. biopharmaceutical workforce.
The administrations’ proposal to reduce Medicare Part B costs by adopting foreign price controls via an international pricing index is particularly concerning, as it threatens to dismantle care infrastructures for the more than 54 million Americans who rely on Medicare Part B. Many Part B-covered medicines, typically injected or infused by physicians, are essential for patients with life-threatening conditions like cancer, cardiovascular disease, diabetes, HIV/AIDS and Parkinson’s disease.
These patients often spend years enduring numerous emergency room visits, hospitalizations, diagnostics tests and surgeries before finding the right treatments. They cannot afford delays or disruptions.
Although price controls could lower the list prices for certain drugs, they will almost certainly jeopardize patient care by arbitrarily limiting access to necessary medications. In the United States, we are fortunate to have great access to innovative therapies.
For example, 96 percent of new cancer drugs are available in the United States. That number drops to between 8 and 75 percent in the 14 reference countries. In addition, patients in those countries must endure an average 17-month wait before they can access cancer drugs that are already available in the United States. A recent analysis of 220 drugs released between 2011 and 2017 found that patients in the United States could access 90 percent of them, while patients in Canada and France could only receive half.
Increased access to new therapies is helping U.S. patients live longer. In 2016, the combined cancer death rate for women and men had fallen 27 percent from its peak in 1991. This equates to more than 2.6 million deaths avoided each year.
Delayed or restricted access to effective drug combinations gives diseases windows to advance and even become drug resistant. In addition to the humanitarian implications, this approach could increase the number of hospitalizations and therefore increase health care costs.
Economically, price controls just do not work. Although they might lower costs in the short run, they will have a devastating impact on supply, potentially generating dangerous shortages. According to the Department of Commerce, price controls also stifle innovation and cause reduced research and development investment by 11 to 16 percent annually in countries that adopt them.
A recent study shows that the IPI model will negatively impact investments, decreasing opportunities for new therapies. Price controls will shut the door on new products for patients who lack currently available treatments.
Reduced investment will also impact a strong economy, particularly in California. According to CLSA’s 2019 Life Sciences industry report, the Golden State’s over 3,400 life sciences companies employed over 300,000 people and had more than 1,300 new therapies in the pipeline.
There are ways to bring further market-based competition to Medicare Part B and lower costs for patients, states and the federal government, while preserving California’s global position as the leader for life sciences innovation. After all, don’t Californians deserve a uniquely American solution to our complex health care system rather than importing price controls from flawed systems that place little value on human life and deny patients access to much-needed medications?
We need to be as innovative with our policy solutions in California as we are with our science and transform our health care system to one that is patient-centric, rewards value and sustained innovation, and promotes competition and choice. CLSA stands ready to lead this conversation.
Mike Guerra is president and CEO of the California Life Sciences Association, the statewide trade association for California’s life sciences sector, which helps advance public policies that promote medical innovation.
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