In a win for industry, Trump administration issues scathing review of Pelosi drug pricing bill
President Donald Trump wants it both ways — cheaper drugs and vigorous innovation. Earlier this year, the Democrats’ revealed their drug pricing bill, which is engineered to empower the HHS to negotiate prices for select drugs. The White House has now emerged as one of its harshest critics.
“Heavy-handed government intervention may reduce drug prices in the short term, but these savings are not worth the long-term cost of American patients losing access to new lifesaving treatments,” the Trump administration wrote in an analysis posted on Tuesday, providing a boost to the industry that has thrived in its largely Laissez-faire ecosystem.
Republicans and Democrats both argue drug prices in the United States are too high. The Democrats’ drug pricing bill — HR 3, unveiled by Speaker Nancy Pelosi in September — could compel manufacturers to comply with the prices set by the HHS, or face an excise tax of up to 95% of sales, which in turn could trigger financial losses due to drug sales.
Lawmakers left, right and center are devising their own plans to help American patients navigate the expensive healthcare system — but so far nobody can agree on just how to make it great again. Meanwhile, the Pelosi legislation ignited criticism from some Republicans and Democrats, who fear it would chill investment in pharmaceutical research and stifle innovation. That’s the track taken by Big Pharma — which holds the crown for the least favored sector by Americans, falling behind the federal government itself. A clutch of biotech venture capitalists who claim to have invested a combined $20 billion in the industry also expressed their frustration with the bill, suggesting innovation will be unjustifiably compromised.
A preliminary analysis published by the Congressional Budget Office (CBO) in October estimated the bill would shave federal direct spending for Medicare by $345 billion over the 2023-2029 period, but cautioned that the reduction in drugmaker revenues in the expected range of $500 billion to $1 trillion would culminate in approximately 8 to 15 fewer new drugs hitting the market over the incoming decade.
But it looks like nobody has quite worked out how many drugs the loss of $500 billion to $1 trillion could potentially take away from the American public. On Tuesday, the White House issued a statement, suggesting the Pelosi bill could result in as many as 100 fewer drugs from reaching the market over the next decade, citing the calculations of the Council of Economic Advisers (CEA), an agency within the executive office of the President.
That 100 number is based on the assumption that pharmaceutical companies typically spend 15% to 20% of their revenue on R&D, which would imply a loss of $75 billion to $200 billion in R&D resources and the basis that getting a drug from discovery to approval costs $2 billion. Using another set of assumptions, the CEA calculated the bill would also reduce Americans’ average life expectancy by about four months.
On the flip side, the bill would save the federal government an average of $34.5 billion per year for the next 10 years, the White House report said. However, by employing ‘standard’ methods of determining health gains, the group predicted the fall in health outcomes could cost between $375 billion to $1 trillion per year over the next decade, suggesting the bills “long-term health costs are at least 10 times larger than the short-term savings.”
This report is internally contradictory. Either decreased prices = decreased revenues = decreased innovation, or not. How that endpoint is achieved (Potus vs HR3) should not matter and yet here apparently one approach scuttles innovation and the other doesn’t. SMH.
— Peter B. Bach, MD (@peterbachmd) December 3, 2019