The enduring problem of modern health care — especially for a country as enormous and varied as the United States — is that there is no easy solution or else we'd already be doing that. The notion that everyone can enjoy perfect health care immediately is a fantasy. There is no silver bullet, there are no bad guys we can just vilify.
And then … Nancy Pelosi enters the ring.
Speaker Pelosi has introduced HR 3 – The Lower Drug Costs Now Act. Among its lofty promises, HR 3 would empower Medicare to negotiate directly with drug companies, make these prices available to all Americans with private insurance, and "stop drug companies from ripping off Americans while charging other countries less for the same drugs."
It's hard to argue with these promises, which is why whoever wrote Pelosi's press release didn't admit that HR3 would actually save insurers money at the expense of biopharmaceutical progress and quality of care.
If one digs a little deeper than the press release into the actual bill, one sees that HR 3 is a power-grab for Democrats across our entire health care system, not negotiation between manufacturers and the government. It reaches beyond Medicare into the commercial market, the VA, and TRICARE, not in the spirit of negotiation, but sweeping reform in which the government sets prices for medicines across all markets.
Pelosi's sleight of hand with our health care system uses the International Pricing Index (IPI), which pegs what America pays for a particular drug compared to the price paid in some set of other countries. What this amounts to is government price setting — something that always, always fails.
With government-mandated price controls, patients have significantly worse and slower access to innovative medicines. While nearly 90% of new medicines launched from 2011 to 2018 are available in the U.S., patients in the U.K., France, and Australia have, respectively, access to just 59%, 50%, and 36%.
Enforcing price controls on prescription drug companies — while fuming about how they're "ripping off" Americans might feel good in the moment — would spell disaster for the medicines of the future. Imposing price controls on any first-in-class drug creates exactly the wrong incentive for investment in the development of new treatments for our most devastating illnesses, like rare diseases and Alzheimer's.
Given that we now live in the era where mistakes by the Chinese government can contaminate the entire world with a new, terrifying virus, it seems like we should help first-in-class drug makers, rather than treat them like the bad guys.
Furthermore, HR 3 would open the door to discriminatory value assessments.
Pelosi's bill would do this based on Quality Adjusted Life Years (QALY), a generic measure of an individual's health burden — covering age, sickness and disability — to inform medical decisions, evaluate programs and set priorities. Such value assessments assume that a year spent in perfect health, is "worth more" than a year spent otherwise. This value assessment disregards the fact that someone living with a chronic condition can try to live a satisfying life nonetheless.
It's also discriminatory.
At least that's according to the Consortium for Citizens with Disabilities (CCD), the largest coalition of national organizations to advocate on behalf of children and adults with disabilities. In a letter on HR 3, the CCD wrote, "The QALY is a discriminatory measure based on the idea that disabled lives are less valuable than non-disabled lives."
CCD likewise rejects the IPI, because many nations use QALY to set prices, so putting them into the U.S. legal code would "effectively import a discriminatory system from abroad."
Price controls are very bad. The only group they help are insurance companies, who are already making out like bandits under Obamacare and have poured $74 million per year into lobbying to get love letters like the Lower Drug Prices Now Act.
Instead of setting drug prices to save the government and health plans money, America should be looking to real reforms that empower patients, preserve access, promote price transparency and improve affordability. There is no silver bullet — but with this one Pelosi really seems to be doing her best werewolf impersonation.
Jared Whitley is a long-time politico who has worked in the U.S. Congress, White House, and defense industry. He is an award-winning writer, having won best blogger in the state from the Utah Society of Professional Journalists (2018) and best columnist from Best of the West (2016). He earned his MBA from Hult International Business School in Dubai. To read more of his reports — Click Here Now.
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