Amidst the deluge of impeachment coverage, Speaker Pelosi has announced she will be bringing her aggressive prescription drug pricing bill to a vote in the House on Wednesday.
The bill would impose destructive price controls on medicines, levy crushing taxes of 95% on sales if companies that don’t play along, and extend the price controls to private plans.
The Council of Economic Advisers issued a report earlier this week showing her bill would lead to creation of 100 fewer new treatments and cures over the next decade.
In contrast, a bill designed to protect innovation was released by House Republicans today. It incorporates bipartisan proposals designed to lower out-of-pocket spending for seniors, address high insulin prices, increase price transparency and accountability, and encourage private-sector competition on prices.
“This isn’t the ‘Republican’ plan. This is the bipartisan plan that can become law, and at the very least deserves a vote,” one staffer told us.
We had expected Congress to turn to surprise billing measures first, but it seems drug pricing has leapt to the front of the line. More below on Doug Badger and Brian Blase’s latest paper with sensible surprise billing recommendations.
The drug pricing issue is still hot despite the fact that prescription drug prices are decreasing at rates not seen since the 1960s, according to another Council of Economic Advisers paper. During the Obama administration, prescription drug prices increased by an average of 3.6% a year. Fast forward to today: there have been year-over-year price declines in nine of the last ten months.
Case in point: Amgen. The California-based biopharmaceutical company earlier reduced by 60% the list price of its cholesterol drug Repatha.
It cut the price from the $14,000 launch price to $5,850 a year in a bid to make the medicine more affordable to patients. But some health plans continued to offer only the higher-priced Repatha. As a result, patients with health plans requiring co-insurance payments faced much larger out-of-pocket costs based upon the higher price. Starting next year, Amgen will make only the reduced-price version available.
Other companies are also voluntarily reducing prices: Eli Lilly & Co. earlier offered a half-priced version of its diabetes medicine Humalog.
Pelosi’s drug bill would attack the industry just at the dawn of dramatic new treatments, such as a new drug just approved for cystic fibrosis and another being developed for deadly pancreatic cancer that induces the self-destruction of pancreatic cancer cells and which, in early testing, reduced the number of cancer cells by 90% in tumors in just one month.
These dramatic discoveries, and voluntary price reductions, would be crushed by government price controls.
The Council of Economic Advisers estimates that “HR 3 could lead to as many as 100 fewer drugs entering the United States market over the next decade, or about one-third of the total number of drugs expected to enter the market during that time.” The loss in economic value of new, better drugs, and the resulting worse health outcomes could reach $1 trillion per year over the next decade—far more than HR 3’s projected savings, CEA concludes.
Americans and the world would suffer the harm over decades. They deserve real policy solutions, not a political hammer throw. First, Do No Harm.
Congress also is poised to address surprise bills—and we also could be surprised by the timing of a vote. Doug Badger and Brian Blase have produced a detailed paper, A Targeted Approach to Surprise Medical Billing, that offers solutions to protect consumers primarily by preventing insurers and providers from giving false and misleading information and by requiring that patients can receive a good faith price estimate in advance of receiving scheduled care.
For the especially difficult problem of people receiving emergency services at out-of-network facilities, they would apply existing federal regulations to determine the rate that insurers compensate providers in this narrowly-defined instance.
The debate has hit a stalemate as the two powerful interest groups that often benefit from surprise medical bills, providers and insurers, are at loggerheads over two paths—forced arbitration or rate-setting.
If Congress makes rate-setting the solution to surprise bills, which consumers rightly resent, it may be difficult to explain why it shouldn’t adopt the same approach to medical bills that aren’t surprises, which consumers also often find unpleasant, they explain. This would open the barn door to price controls throughout the heath sector. Arbitration is bad for many other reasons.
Doug and Brian argue that Congress should adopt a more thoughtful, targeted approach to the problem based upon truth-in-advertising protections combined with a good faith estimate requirement.
The full paper provides a detailed roadmap to these sensible solutions.