In November, a group of Democrats in the U.S. House made clear that they'll sacrifice medical innovation for lower drug prices if they ever reclaim Congress.
Patients today and tomorrow will be the losers in that trade.
Democratic lawmakers have introduced the Lowering Drug Costs for American Families Act, which would expand the number of drugs subject to price controls under Medicare from the 10 under the Part D benefit starting in 2026 to 50 per year starting in 2029.
It would also apply those price controls to prescription drugs for those with private insurance. The effects would be catastrophic.
Consider how drug companies have responded to the Inflation Reduction Act (IRA) of 2022, which imposed price controls on drugs dispensed through Medicare for the first time.
Since September 2021, when the IRA was introduced, funding for research into new small-molecule drugs — the chemically synthesized medicines we typically consume as pills — has plummeted by 70% across the industry.
By slashing pharmaceutical industry revenue and thus the amount of money available for research, the IRA's price controls could result in as many as 135 fewer new drugs being developed by 2039, according to research from University of Chicago economist Tomas Philipson.
Developing a drug takes more than a decade and an average of $2.6 billion. Just one in ten drug candidates makes it from the lab through the regulatory process and onto the market. The prospect of price controls makes investing in drug research far less appealing. And so less of it happens.
If fewer new drugs hit the market, then many patients desperate for effective therapies will continue to suffer.
Philipson estimates that the drop in new drugs caused by an IRA-induced fall in research and development spending will generate a loss of 331 million life years in the United States through 2039.
Now imagine the consequences if the IRA's price controls are expanded and extended to the commercial market, as Democrats intend.
Well over half of Americans are covered by some form of private insurance. About 69 million people are enrolled in Medicare; 81% of them have prescription drug coverage through Medicare Part D.
The Democrats' bill amounts to a government takeover of the U.S. drug sector.
Pharmaceutical innovation stateside would come to a standstill.
Drug makers would flee the U.S. market.
That's precisely what has happened in other countries with sweeping drug price restrictions.
The United Kingdom's system of price controls has so dramatically undervalued the latest medicines that many major drug companies are now leaving the country.
Under the Democrats' plan, it wouldn't take long for America to suffer a similar fate.
The economic impact of such an exodus would be devastating.
After all, the life sciences industry isn't just a source of new therapies.
It's a vital component of our economy that employs nearly 2.3 million Americans across almost 150,000 different businesses. In 2023 alone, the drug industry contributed a whopping $3.2 trillion to our economy.
What makes the House Democrats' plan all the more baffling is that it comes at a moment when prices for many popular drugs are falling on their own.
Just last month, Novo Nordisk announced it would slash prices for its weight-loss therapies Wegovy and Ozempic to as low as $349 a month for patients paying directly. That's down from around $1,000 last year.
Expanding Medicare's price controls into the private market would make the business of drug discovery all but impossible in the United States — and mark the end of America's reign as the world's leading source of life-saving medicines.
Sally C. Pipes is President, CEO, and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute. Her latest book is "The World's Medicine Chest: How America Achieved Pharmaceutical Supremacy — and How to Keep It." Follow her on X @sallypipes. Read more of Sally Pipes' reports — here.
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