We hear that Trump’s planning to sign an executive order today tying the cost of certain Medicare drugs to what other countries pay. Here’s what we know—and a reminder that foreign price controls would be really bad for patients, especially right now.
What do we mean by "foreign price controls"? Basically, they would allow the federal government to set prices for certain prescription drugs covered by Medicare based on the prices paid in other countries with government-mandated health care restrictions.
This isn’t the first time this has come up. In 2018, the administration proposed an International Pricing Index (IPI) for Medicare based on prices adopted by countries with single-payer health care pay. It has resurfaced now and then, but didn’t go anywhere.
But now, it's getting worse. The regulations would significantly reduce the Medicare Part B reimbursement rate for physician-administered therapies to the lowest price offered in any OECD country, which includes developed and developing countries. This is a far more extreme price control policy than the 2018 IPI.
We don’t know all the details yet—and “it is unclear how that would be put into practice, and if the new system can go through the regulatory process and be implemented before the election,” reports The Hill.
But we do know foreign price controls would jeopardize patient access to new cures. The absence of price controls in the U.S. leads to more and newer medicines available sooner to Americans. Of the 74 cancer drugs launched between 2011-2018, 95% are available in the United States, compared with 74% in the UK, 49% in Japan, and 8% in Greece.
And they would stifle investment in new cures. Analysis of similar proposals, like Speaker Nancy Pelosi’s drug pricing plan (H.R. 3), found foreign price controls would result in many fewer new medicines coming to the market.
Trump’s own economic advisers agreed—saying H.R. 3 would make us miss out on as many as 100 new drugs over the next decade.
This would be especially detrimental to small biotechs researching innovative COVID-19 cures. H.R. 3 would have led to a 90% reduction in medicines developed by small U.S. biotechs—which drive 70% of all R&D, including for COVID-19.
Dan’s Deep Dive: Importing foreign price controls into Medicare would be detrimental to patients and to America’s scientists and researchers trying to develop new cures and treatments. Indeed, adopting foreign price controls when biotechnology researchers are working around the clock to fight COVID-19 is absolutely the wrong prescription. It will undermine investment in R&D, chill progress, and ultimately, hurt the very patients who are the most vulnerable to COVID-19 and other life-threatening diseases. We need to reject this misguided scheme and work on real solutions that will lower out-of-pocket costs for patients and continue to support the future development of cures and treatments for patients in need. – Dan Durham, BIO’s EVP for Health Policy
