Health care was the top issue when voters went to the polls in November, and on Tuesday night, President Donald Trump will give his State of the Union address to a new Congress that carried these sentiments from their home districts.
The rising cost of care has everyone’s attention, however, and in a well-intended search for solutions, many in both parties have turned to broad proposals that would actually hurt patients and cripple our health care system.
Proposals like those from Sen. Bernie Sanders (I-Vt.) would cap the price of physician-administered drugs in Medicare Part B based on a median price generated by five reference countries while empowering Health and Human Services Secretary Alex Azar to undermine intellectual property rights and patents. Other proposals have come from within the Trump administration, laying out similar policies that would import socialist price controls from reference countries.
And these are the more nuanced proposals, to say nothing of “Medicare-for-all” proposals, which would cost $32 trillion.
These proposals would establish a new level of unprecedented government intervention into the U.S. health care system, which would have immediate and widespread negative effects on U.S. companies, competitiveness, and patients.
It’s why industry and patient groups such as the American College of Rheumatology and Community Oncology Alliance formally submitted comments opposing the policy. Our organization, Consumer Action for a Strong Economy (CASE), has vocally opposed the policy proposed by the U.S. Department of Health and Human Services, which closely mirrors this proposal.
At the heart of our opposition is the simple truth that these policies would reduce access to needed, cutting-edge drugs for Medicare beneficiaries and, even worse, lessen investment into future cures and innovation. It’s a one-two punch of both immediate and long-term negative effects.
In fact, we need to look no further than the countries under consideration as “reference countries.” Sanders’ plan highlights five countries, while Azar’s uses 16 — all of which employ government-run health care systems. In these systems, governments have only two options to lower costs: restrict or deny care. It’s why in the United Kingdom, Japan, and Greece, only 74 percent, 49 percent, and 8 percent, respectively, of cancer drugs launched between 2011 and 2018 are available.
In contrast, 95 percent of these drugs are available today in the U.S.
Sadly, these reference countries opt to use older treatments rather than the latest, cutting-edge therapies. For patients in these countries, this means that they don’t have access to the latest cures, which are possibly more effective or could better treat their specific symptoms. For patients, this choice matters. It’s why the United States has the highest five-year survival rate for cancers in the world.
Even more concerning is the long-term chilling effect that this policy would have on research and development of new cures.
When pharmaceutical companies can compete in a free marketplace that prices their cures at a value that reflects years of research and trials, they have the incentive to continue researching and investing in those cures for the future. We’ve seen this in action. Last year, as a result of the Tax Cut and Jobs Act, pharmaceutical companies invested more in research and development.
This should come as no surprise to anyone familiar with even basic economics. Profits are best spent when reinvested into future innovation, creating better, more efficient products (in this case, better drugs) that better serve markets and help keep the company competitive.
Proposals like an international pricing index and “Medicare-for-all” would obliterate that market, forcing companies to accept lower-than-market values for their innovation and reducing the incentive to research those cures.
This means fewer cures for future generations and less competition and choice for patients today.
Importantly, that competition brings down prices. We’ve seen this in our own health care system, where a cure for hepatitis C – itself an almost miraculous feat of human ingenuity and the product of decades of research – saw its price fall as more cures and competitive treatments came to market.
In a broader context, this system has enabled the U.S. to maintain its leadership role in bringing critical advancements in treatments to the patients who need them. The White House’s own Council of Economic Advisers stated February 2018 that “preserving incentives to innovate will ensure that the effective price of health can continue to decrease over time” and that the U.S. “funds about 44 percent of world medical R&D, invests 75 percent of global medical venture capital, and holds the intellectual property rights for most new medicines.”
In short, innovation in the U.S. powers the global pharmaceutical industry.
On Tuesday night, we will get a glimpse of where the president intends to head on this issue and how receptive lawmakers are to his direction. Despite what may be said, let us hope our leaders in Washington understand that government interventionist policies threaten patient access to the next generation of innovative cures and treatments. And let us hope they firmly reject this path.
Gerard Scimeca is an attorney and Vice President of CASE, Consumer Action for a Strong Economy, a free-market oriented consumer advocacy organization.
Disclaimer: This is an opinion piece. The views and opinions expressed by the author are those of the writer and do not reflect the editorial opinion of IJR.