By Tom Kowalski, National Co-Chair, We Work For Health
This week, Congress is rushing to finalize a massive legislative proposal that would have far reaching consequences for millions of American seniors. As it stands now, the legislation would enable government price setting of prescription medications in Medicare while doing little to make prescription drugs truly affordable for patients in need. What’s more, the proposal seriously threatens the ability of the biopharmaceutical sector to research and develop new and future cures for conditions that could affect everyone.
To fully grasp what’s at stake, consider the present-day impact of the biopharmaceutical sector on the U.S. economy. A true powerhouse of American innovation, the industry’s impact can be measured not only by the hundreds of thousands of jobs it directly supports but also by the millions more supported by vendors who provide services and supplies to the industry.
According to data sourced by TEConomy Partners, LLC, some of the largest biopharmaceutical companies in the U.S. support 4.4 million jobs directly and indirectly and contribute a combined $1.4 trillion in economic output in 2020 alone. With a footprint in every state, the biopharmaceutical sector is particularly strong in states such as New Jersey, Delaware and Pennsylvania, which are renowned for their vibrant and dynamic economies, well-educated workforces and prosperous communities. In these three states alone, the combined direct and indirect impact of this industry amounts to nearly $200 billion in economic output and almost 627,000 jobs.
It’s no surprise then, that the U.S. is responsible for developing a disproportionate share of the world’s cures. An estimated 60% of new therapies now originate in the US, and 62% of global biopharma therapies are commercialized in the U.S. regardless of the location of the parent company.
The legislation currently in front of Congress is being billed as a proposal to allow Medicare to “negotiate” prescription drug prices, giving Washington the ability to arbitrarily control the prices of new medications. Every day, evidence continues to pour in showing how government price setting will weaken the biopharmaceutical sector’s research & development infrastructure, and jeopardize the industry’s ability to develop new treatments and cures. A new report from Vital Transformation found that the proposal could cause nearly 600,000 U.S. job losses while substantially reducing capital available for R&D partnerships and pipeline investments into drug discovery and development.
With government price setting policies in effect, any R&D advantages could be eroded away. And this will have consequences far beyond the job losses and slowed growth in the parts of the country where the biopharmaceutical sector is particularly established. The reality of fewer cures in development means that our country will be less prepared to respond to future pandemics and public health crises. Compare this with the heroic efforts of the biopharmaceutical sector that have been on full display as innovators continue to race against the clock to develop new COVID-19 vaccines in record time. Now, with the rapid spread of the Monkeypox virus (which was compounded by public policy missteps on the part of the federal government), we may be in need of another all-hands rush for new or better therapies. A less flexible and resilient biopharmaceutical sector would make such a sprint more difficult.
Americans of all ages are frustrated by the high cost of prescription drugs and we need to take it seriously. But there’s a clear difference between policies that drive change for the better and those that cause harm.
Lawmakers should focus on addressing the failures of the insurance system that prevent patients from fully benefiting from industry-provided discounts. These discounts are currently being pocketed by insurance company middlemen known as Pharmacy Benefit Mangers, or PBMs, instead of being passed on to patients at the pharmacy counter. Further, policymakers should ensure payers aren’t able to restrict patient access in other ways, such as through utilization management techniques like step therapy and prior authorization that make patients undergo an onerous and frustrating process to access the medications they need. Finally, lawmakers should focus on making out-of-pocket costs more affordable and predictable for patients, including copay caps for medicines for a variety of chronic conditions such as diabetes, high blood pressure and COPD, among others.
Government price setting – and the grave consequences it will have for one of America’s most impactful and innovative industries – sends a message that much-needed innovation can, at best, be put on hold indefinitely. On a more sinister note, it sends a message that it isn’t worth pursuing at all.
The past two and a half years clearly tell us why we can’t accept either scenario.