The Wall Street Journal provides clear evidence that the government’s draconian price control scheme already is quashing drug development.
In “How Biden’s Inflation Reduction Act Killed a Cancer Study,” the editors explain that Seagen, a Seattle-based biotechnology firm, has scrapped further study on a new cancer drug because of the law.
The drug at issue, Padcev, delivers a payload of chemotherapy directly to cancer cells and “minimizes collateral damage to healthy non-cancerous cells.”
It is used with Merck’s immunotherapy blockbuster Keytruda, and the combination is “a first-line bladder cancer treatment after a trial showed the combination shrank or eliminated tumors in 68% of patients,” with new studies showing the therapy cut mortality by half.
Seagen CEO David Epstein told investors last week he can’t see a path to continuing research to test for other indications because the drug is in the cross-hairs of the government’s price control scheme. This has to be especially painful since Epstein has spent his career in cancer drug research and development.
Price controls would hit Padcev in 2030, shortly after a new indication might eventually be approved. The company couldn’t justify to investors that the return would justify hundreds of millions of dollars it would have to invest in trials to receive FDA approval.
To show how destructive the law’s provisions are, “The more patients helped by a drug, the more likely it will be selected for Medicare price controls.” Companies that refuse to “agree” to the government’s price face monstrous taxes that can cost up to 1,900% of the drug’s daily revenues.”
What does this mean? The Journal concludes: “…price controls on drugs will end up shortening the lives of people who might have been saved with new treatments.”
President Biden needs to take a serious look at how these policies are impacting his Cancer Moonshot.
When the IRA was being debated, the Congressional Budget Office estimated that only one drug would not be developed over the next 10 years as a result of the government “price negotiations.”
Former White House chief economist Tomas Philipson disagrees. He estimates that because of the price control regime, 135 fewer drugs will be brought to market, amounting to $18 trillion in health-related losses and through 2039 leading to332 million lost life years!
The impact on patients will be significant, decimating drug development as pharmaceutical companies pull funding for promising drugs from the research pipeline, Philipson predicted before the law passed.
Nina Schaefer of Heritage and I wrote recently that drug innovation is on the chopping block. A number of other pharmaceutical company CEOs have said they are having to pick and choose which promising drugs to pull from the research table. Eli Lilly CEO David Ricks earlier said the IRA was the reason it was forced to drop research on a promising drug it was developing to treat various blood cancers.
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Other items of interest:
- Wharton Professor Emeritus Mark Pauly has a blog post about the Lower Cost, More Transparency Act’s site-neutral payments, “The Economics of Health Price Transparency and Site-Neutral Payments.” He explains that the Law of One Price may not apply in the setting of medical services and that site-neutral payment provisions may prevent the proposed legislation from accomplishing its intended aims.
- Laura Hobbs, director of health care policy at the American Action Forum flags the relaunch of AAF’s Drug Pricing Clinic (https://www.americanactionforum.org/series/the-drug-pricing-clinic/) with new and updated resources on 340B, Medicare, Medicaid and prescription drugs.
“For millions of low-income or uninsured Americans, affording their medicines has been a challenge. The federal 340B Drug Pricing Program was intended to serve these vulnerable patients by providing them access to discounted medicines and community care programs. But, as it grew, the 340B Program may have lost sight of its important mission.” - On Tuesday, November 7, at 12:00 p.m., the Pioneer Institute invites you attend a live event in Washington or via Zoom for a policy discussion on 340B. You will see a live demonstration of Pioneer Institute’s new 340B website, where users can explore how for-profit pharmacy chains have grown exponentially under the program originally designed to assist nonprofits and low-income patients.
The event will be led by Dr. William S. Smith, Senior Fellow & Director of Pioneer Life Sciences Initiative, and Dr. Robert Popovian, Founder of Conquest Advisors and Senior Visiting Health Policy Fellow at Pioneer Institute.
