It may be winter in the U.S., but the 2020 campaign season is heating up, especially in swing states that could determine political and ideological control of Congress.
Those states are being stormed with ads picking up on public outrage over prescription drug prices. The ads, sponsored by Democratic-leaning groups, characterize lawmakers opposed to H.R. 3, the Lower Drug Costs Now Act, as being in the pockets of big pharma. The partisan bill, drafted behind the closed doors of House Democratic leadership, mandates that Medicare annually negotiate prices on 250 of the costliest prescription drugs in the U.S., with that number escalating over the years, and it imposes a steep inflationary rebate designed to end hefty price increases.
In an attempt to weather the storm, House Republicans have launched the #FewerCures Facts video series to highlight the human cost of H.R. 3 by emphasizing the new cures that may never materialize if H.R. 3 were to become law.
The White House Council of Economic Advisers (CEA) raised its own umbrella this week, issuing an estimate that H.R. 3 could lead to as many as 100 fewer drugs entering the U.S. market over the next decade. That’s about a third of the total number of new drugs expected to come to market in the next 10 years.
The council’s estimate is considerably higher than the eight to 15 new drugs that the Congressional Budget Office (CBO) predicted wouldn’t make it to market under H.R. 3 due to the predicted $350 billion in savings the bill would deliver.
It’s also higher than the estimate provided by an analysis sponsored by the biopharma industry. That analysis, conducted by the economic consulting firm Vital Transformation and released last month, projected that the tradeoffs of H.R. 3 would result in at least 56 fewer drugs coming to market.
Beneath all the partisan gusts is a shared belief in Congress that U.S. prescription drug prices – brand ones, that is – are too high and something must be done to bring them more in line with what the rest of the world is paying. There also is bipartisan agreement that the current system is a failure of the free market.
The agreement ends at how to fix the perceived problem. While most Republicans give at least lip service to market fixes, many Democrats are openly pushing for government control of the biopharma industry.
That’s apparent in the “negotiating” process detailed in H.R. 3. Title I of the bill charges the Health and Human Services secretary with conducting the price negotiations, using a ceiling of 120% of an average international market price. The price could then be negotiated downward, based on R&D and manufacturing costs for the specific drug.
Manufacturers that fail to accept the price would face an escalating excise tax on gross sales of the drug – starting at 65% and increasing by 10% every quarter the price is out of compliance, to a maximum of 95%. Since the excise tax would not be deductible from income tax, manufacturers would lose money if they didn't accept HHS’ price, which would extend to all government programs and the private sector.
By limiting price based on only the cost of developing, manufacturing and marketing a specific drug, H.R. 3 ignores all the money drug companies invest in a pipeline that pours out more failures than successes and in orphan or niche drugs that are sorely needed but will never become blockbusters. The bulk of that investment is coming more and more at the expense of startups rather than big pharma, since that’s where innovation tends to start these days.
House Democrats are downplaying the concerns about the what ifs of H.R. 3, attributing fears of fewer drugs to talking points of the biopharma lobby. Instead, they’re touting the billions of dollars in savings Title I could provide in direct federal spending on Medicare Part B and D drugs.
"It's worth sacrificing eight to 15 new drugs for that savings," Rep. Darren Soto (D-Fla.) said at a House Energy and Commerce Committee markup of the bill in October. Some of his colleagues chimed in that patients could do with fewer “me too” drugs that provide, at the most, only an incremental improvement in convenience or safety.
But what if a drug lost under H.R. 3 were a cure, or could lead to a cure, for diabetes? Alzheimer’s? Or pediatric cancers? Those were the questions Republicans raised at the markup.
In its estimate, the CEA claimed that, by reducing the development of what could be lifesaving drugs, H.R. 3 would reduce Americans’ average life expectancy by about four months. While that may not seem like much at first blush, it is nearly a quarter of the projected gains in life expectancy over the next decade, according to the White House council.
“Furthermore, the economic value of this loss of new, better drugs, and the resulting worse health outcomes, could reach $1 trillion per year over the next decade,” the CEA claimed. “That is far larger than H.R. 3’s projected savings.”