Pharmaceutical Policy: Will Washington Upset Elegant Balance?

Pharmaceutical Policy: Will Washington Upset Elegant Balance?
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“Policymakers should be loath to tamper, even at the edges, with [the] elegantly balanced system of free-market drug development in the United States – one that encourages innovation and investment while generally working to stabilize prices at their lowest level possible.” Those words, written by the National Taxpayers Union (NTU) in a letter to Congress just two weeks ago, were meant to express opposition to a prescription drug importation scheme proposed as an amendment to the Senate’s FY 2017 Budget Resolution. Yet, they also apply to a number of other developments about federal policy toward pharmaceuticals.

As NTU has noted in our policy paper Trading in Trouble, there are many reasons why taxpayers should be concerned about proposals to permit prescription drug importation from abroad, and they dodged a bullet to their wallets when the Senate rejected the amendment, 52-46. Yet, Americans who know that drug development saves lives and in the long run other health care costs can hardly breathe a sigh of relief. Two of the “yes” votes, none other than Bernie Sanders (I-VT) and Ted Cruz (R-TX) affirmed their support for importation during a CNN debate earlier this week over Obamacare repeal.

Equally troubling, hidden in those “no” votes could very well be Senators who agree with the idea of importation, but simply voted against the amendment to advance the larger Budget Resolution through the legislative process. Lawmakers who might have had such thoughts during that debate ought to be disabused of them after reading a piece from Dr. Scott Gottlieb, a former FDA Deputy Commissioner and high-level official at the Centers for Medicare and Medicaid Services. Writing in Forbes last year, he eloquently warned public officials (including then-candidate Donald Trump) about the pitfalls of an importation regime installed under the auspices of government:

Yet when importation of foreign drugs is done under a regulated scheme, it really wouldn't save money. I know. I worked on sketching an importation scheme for the FDA regulation of imported drugs when it looked like similar legislation would pass in 2004. That scheme would have added so much cost to the imported drugs; they wouldn’t be much cheaper than drugs sold inside our closed American system. 

Providing a reasonable measure of oversight to reduce the number of counterfeits coming through an importation scheme is complex and costly. It’s very hard to “inspect in” safety after a drug is manufactured. There’s no question that a drug importation scheme will increase the flow of counterfeits in the U.S. supply chain. Policy makers would have to weigh that cost against any perceived benefits.

The counterfeit issue – and its fiscal consequences – were on NTU’s mind in 2016 as well, when we penned a letter to lawmakers and an op-ed about the House Energy and Commerce Committee’s probe of enforcement activities and potential management deficiencies at the FDA’s Office of Criminal Investigations (OCI). As we commented in November of last year, policing counterfeit drugs is not necessarily a selective matter – even drugs like Botox have non-cosmetic uses, and in adulterated form, can severely hurt patients as well as boost follow-up care costs in taxpayer-funded health programs. These cost-benefit considerations should be separate and distinct from other aspects of the OCI investigation, such as the agency officials’ moving expenses or travel arrangements. Unfortunately, the FDA’s response just two weeks ago to the Committee’s request for more information has, in the opinion of Committee Chairman Greg Walden (R-OR), left “more questions than answers” for Congress. This means NTU will remain engaged in the OCI saga, to ensure that officials in both branches of government keep their focus on protecting patients and taxpayers from the full spectrum of harms from counterfeit medicines. 

Scrutiny for both ends of Pennsylvania Avenue is still vital for taxpayers hoping to get the best value out of policies toward drug development. Even though President Trump’s meeting last week with pharmaceutical executives ended on a high note of pledging to clear away tax and regulatory hurdles that keep more cures from quickly entering the market, past campaign-season proposals still loom in the background. 

That’s why a recent coalition of taxpayer groups opposing attempts to give the government even more power to set drug prices is so relevant right now. NTU, which joined the letter, has sounded the alarm about repealing “non-interference” protections in Medicare Part D before, since the government already pays extremely discounted prices for pharmaceuticals. Introducing more lopsided “negotiations” into the pricing process will likely lead to rationing through formularies, which could in the long run increase costs for taxpayers as less effective treatments require additional hospital stays or other therapies. Going forward, hopefully the Administration will avoid this chimera. 

As anyone who’s walked a narrow beam or used old-fashioned scales knows, achieving balance requires concentration, attention, and caution. So it is with government policy toward pharmaceuticals. Taxpayers must be vigilant to ensure Washington is up to the challenge.




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