Trump's Drug Pricing Plan Isn't ‘the Best Deal’ for Patients
Within days, President Trump will unveil a new plan to reduce drug prices. Administration officials claim that Americans—who've long paid more for prescriptions than Canadians and Europeans—will now get "the best deal" under this proposal.
The proposal would indeed slash Americans' pharmacy bills—at least temporarily. But those savings would come at the expense of patients' access to cutting-edge drugs. The reform would also jeopardize future medical breakthroughs.
Currently, physicians purchase Part B drugs upfront, administer them to patients, and then bill Medicare for reimbursement. The federal government pays these doctors the average U.S. sales price of the drug, plus a 6 percent markup to cover overhead expenses. On average, Part B drugs cost 80 percent more in the United States than in other developed countries.
Why do Americans pay more for the exact same medicines?
Simple—the United States doesn't impose price controls on pharmaceuticals; other nations do. Many foreign regulatory agencies, such as the United Kingdom's National Institute for Health and Care Excellence and France's Health Products Pricing Committee, won't even make medicines available to patients unless manufacturers offer enormous discounts.
Sometimes, drug companies give in to this. But other times, manufacturers conclude that it's not worth the effort to market their medicines in certain countries.
As a result, patients in those nations have fewer treatment options. Consider cancer therapies. Ninety-five percent of all oncology medicines approved anywhere in the world between 2011 and 2018 were available in the United States. By contrast, patients in the United Kingdom and France had access to only 74 percent and 65 percent of those treatments, respectively. And among the drugs that were approved, British and French patients waited an average of 11 and 20 months, respectively, after the initial launch to access those medicines.
Inexplicably, the Trump administration now wants to copy Europe's anti-patient policies.
Under the administration's proposal, Medicare would reimburse doctors based on an "international pricing index"—essentially an average of the prices paid in other countries, including Canada, France, and the United Kingdom.
Indexing Part B reimbursements to these countries' prices would effectively import their access restrictions too. It'd deprive the sickest, most vulnerable Americans of their medicines.
The proposal would also discourage medical innovation. The United States currently produces over half of the world's medicines.
Drug development is a challenging, expensive endeavor. It costs almost $3 billion, on average, to bring just one new drug to patients. And nearly 90 percent of all medicines that enter clinical trials ultimately fail to win FDA approval.
But if the United States adopts price controls, companies won't pursue as many research projects. The meager potential returns wouldn't justify the considerable risks.
A slowdown in medical innovation would jeopardize U.S. health gains. In the past three decades, cancer death rates have fallen 27 percent. Roughly three-quarters of those survival gains are attributable to new medicines. The sharpest decline has occurred among melanoma patients, who've benefited from two lifesaving immunotherapies covered by Part B—Yervoy and Zelboraf.
The administration's plan is penny wise and pound foolish. By limiting patients' access to existing drugs and discouraging the development of future ones, the proposal would make it harder for Americans to manage their conditions and avoid costly complications. According to a study by my organization, the Partnership to Fight Chronic Disease, new medicines could avoid $6 trillion in healthcare costs and prevent 16 million deaths by 2030.
The administration's proposal condemns Americans to the same life-threatening access restrictions that patients in other countries endure. It's a lousy deal.
Kenneth E. Thorpe is a professor of health policy at Emory University and chairman of the Partnership to Fight Chronic Disease.