Freedom Line Blog

As we approach Thanksgiving, you may have heard (or personally experienced) that the cost of Thanksgiving dinner this year is up a record 20%.

Meanwhile, guess what’s actually declined in price, according to the federal government itself.  That would be prescription drug prices, which declined 0.1% last month alone.

Perhaps the Biden Administration should focus on helping everyday Americans afford Thanksgiving, rather than artificially imposing innovation-killing government price controls on lifesaving drugs, which are actually declining in price and nowhere near the inflation rate afflicting other consumer costs.

We at CFIF often highlight the clear and present danger that drug price control schemes pose to American consumers, who benefit from our private pharmaceutical sector that leads the world – by far – in innovation.  A new lung cancer treatment breakthrough in the form of Amgen’s Lumakras illustrates that interrelationship.

Simply put, Lumakras reduced the risk of progression by 34% compared to chemotherapy in patents with advanced lung cancer, which is particularly welcome considering lung cancer’s especially low survival rate (18.6% over five years, and just 5% for advanced forms).  The breakthrough required years of research and enormous amounts of investment, however, which The Wall Street Journal notes makes Lumakras the type of innovation put at risk by new drug price controls recently enacted by Congressional Democrats and the Biden Administration:

The drug is by no means a cure, but progress occurs at the margin and some patients who had what amounted to a death sentence now have hope to live.  Lumakras is also much less brutal than chemotherapy.

Yet the drug might not have been developed had the Medicare take-it-or-leave-it negotiations that Democrats recently enacted been in effect earlier.  Their price controls will penalize in particular small-molecule drugs like Lumakras that have the potential to help large numbers of patients.  Within six years, Lumakras could be targeted by bureaucrats for price controls and the payoff on Amgen’s investment could vanish.

The reason for that is simple.  Straightforward economic principles dictate the inevitable negative blowback from government price controls, whether in the form of 1970s gas lines here in the U.S. or food shortages in Venezuela.

Even the United Nations World Health Organization (WHO) warns explicitly about these negative consequences of price controls on drug innovation:

[P]rice controls, combined with the threat of market lockout or intellectual property infringement, prevent drug companies from charging market rates for their products, while delaying the availability of new cures to patients living in countries implementing those policies.  

Closer to home, a recent University of Chicago study quantified the destructive effect of drug price controls on future lifesaving innovations:

The United States has fewer restrictions on price than other countries, but the Biden Administration has announced their goal to lower drug prices through greater price regulation…  [N]ew drug approvals will fall by 32 to 65 approvals from 2021 to 2029 and 135 to 277 approvals from 2030 to 2039.  These significant drops in new drug approvals will lead to delays in needed drug therapies, resulting in worse health outcomes for patients.  

As the University of Chicago points out, the U.S. maintains a more market-oriented approach to pharmaceutical innovation than other developed nations, which benefits American consumers.  Of 270 new medicines introduced here in the U.S. since 2011, for instance, Canadians could only access 52% of them, the Germans 67%, the British 64%, the French 53%, the Japanese 48% and the Australians just 41%.  Moreover, the U.S. accounts for two-thirds of all new drugs introduced to the world.

The real-world numbers speak for themselves.  Americans benefit immensely from our world-leading pharmaceutical sector, and Lumakras offers just the latest welcome example.  The sooner the recent drug price control schemes are repealed or scaled back, the more Americans who suffer from cancer and other ailments stand to benefit.

In our latest Liberty Update, we highlight an eye-opening new study confirming how drug price controls kill pharmaceutical investment and innovation at the worst possible time, when America and the entire world depend upon them more than ever.

In similar vein, American Enterprise Institute (AEI) Adjunct Fellow and healthcare expert Michael Rosen nicely illustrates how the omicron variant of Covid has paused the destructive global effort to suspend enforcement of patent rights belonging to lifesaving vaccine developers:

But the new omicron variant of the virus has intervened, shelving the planned WTO meeting and throwing into continued contrast the supposed haves and have-nots of vaccine protection…  But the EU has held firm in resisting the vaccine waiver, and rightly so.”

Unfortunately, even the EU remains too accommodating of calls to kill the goose that lays the golden vaccine eggs, but hopefully this latest experience brings greater collective wisdom.  If we seek to maximize healthcare and pharmaceutical innovation, the solution isn’t any secret.  Get bureaucrats and suffocating price controls and patent threats out of the way.

Today, continuing our longstanding opposition to the ruination of American healthcare by importing foreign price controls and socialized medicine, CFIF proudly joins a 75-group coalition letter to the Centers for Medicare and Medicaid Services opposing the interim final rule to implement the “Most Favored Nation” (MFN) model under Section 1115A of the Social Security Act, which forces physicians, patients and providers into a mandatory demonstration under the ObamaCare Center for Medicare and Medicaid Innovation (CMMI), and which ties prices paid for medicines in Medicare Part B to the prices paid in socialized healthcare systems of foreign nations.

Specifically, the letter explains in detail how the rule will do nothing to stop foreign freeloading off of American pharmaceutical innovation, it will reduce access to new cures (just as it has in those foreign nations), it threatens millions of high-paying American jobs, it moves America one step closer to government-run healthcare and it utilizes ObamaCare to circumvent Article I of the U.S. Constitution.

As demonstrated once again by U.S. pharmaceutical leadership in quickly developing coronavirus vaccines, we’re the envy of the world in this regard.  The last thing we need at a moment like this is to undermine our status with a potentially catastrophic unforced error like this.

Joe Biden’s inexorable march toward the fanatical left continued this week, as he and Bernie Sanders (D – Vermont) introduced their “unity platform” in anticipation of this year’s Democratic convention.  We can thus add weaker U.S. patents and drug price controls imported from foreign nations to Biden’s existing dumpster fire of bad ideas.

Here’s the problem.  As we’ve often emphasized, and contrary to persistent myth, American consumers enjoy far greater access to new lifesaving drugs than people in other nations, including those in “other advanced economies” (Biden’s words) whose price controls Biden seeks to import:

Of all new cancer drugs developed worldwide between 2011 and 2018, 96% were available to American consumers.  Meanwhile, only 56% of those drugs became available in Canada, 50% in Japan, and just 11% in Greece, as just three examples.  Patients in nations imposing drug price controls simply don’t receive access to new pharmaceuticals as quickly as Americans, if they ever receive them at all.”

Even the World Health Organization (WHO) acknowledges that overseas consumers’ lower access to pharmaceutical innovations stems from their governments’ imposition of price control regimes:

Every time one country demands a lower price, it leads to lower price reference used by other countries.  Such price controls, combined with the threat of market lockout or intellectual property infringement, prevent drug companies from charging market rates for their products, while delaying the availability of new cures to patients living in countries implementing those policies.”

Just as dangerously, Biden also advocates weaker patent protections for U.S. pharmaceutical innovators.  The United States has throughout its history led the world in protecting patent and other intellectual property (IP) rights, and as a direct result we’re the most innovative, inventive, prosperous nation in recorded history.  The U.S. claims just 4% of the world’s population, and even our  world-leading economy accounts for less than 25% of global production, yet we account for an amazing two-thirds of all new pharmaceuticals introduced to the world.  Public policy should be strengthening patent rights, not weakening them.

Biden rationalizes his socialized medicine proposal by asserting that “taxpayers’ money underwrites the research and development of many prescription drugs in the first place.”  But as we’ve also noted, private pharmaceutical investment in R&D dwarfs public funding, so he can’t justify his heavy-handed bureaucratic idea on that basis.

Just three months into the coronavirus pandemic lockdown, American pharmaceutical innovators are already entering final testing phases, far ahead of original estimates of their anticipated arrival.  That should come as no surprise, because we’ve long led the world.  But it emphasizes even more that Biden’s toxic proposal to impose foreign drug price controls and to weaken U.S. patent protections is particularly dangerous at a moment like this.

Socialized medicine advocates curiously but persistently suggest that European models offer a superior alternative to the American healthcare system that relies more on private market forces and strong intellectual property rights.  Gallup offers an important corrective, even if unintentionally.  Whereas the percentage of Americans rating their healthcare as positive has remained within a high 76% to 83% window for years, Europeans consistently rate their healthcare satisfaction substantially lower, with only Germany matching American satisfaction levels:

Germany:  84% approve/15% disapprove

United Kingdom:  76% approve/22% disapprove

France:  74% approve/25% disapprove

Spain:  68% approve/31% disapprove

Italy:  51% approve/487% disapprove

That’s important to remember as calls for socialized medicine become louder amid the coronavirus pandemic and as November elections approach.

Bad news, socialized medicine advocates.  The latest Gallup survey on the issue shows that Americans still overwhelmingly rate their healthcare as positive.

Notably, ratings have improved since Donald Trump replaced Barack Obama, and began chipping away at ObamaCare.

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Bad News, Socialists

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Socialized medicine advocates thus have their work cut out for them in selling their program to the American electorate.

The Cato Institute’s Michael F. Cannon engages in some crisp health care “reform” myth-busting for AOL News today.  My favorite is his succinct evisceration of the claim that the Senate bill isn’t a government takeover of health care.

This legislation would force all Americans to purchase health insurance coverage. Government would control what kind of insurance you purchase, where you purchase it, how much you pay and what kind of medical care you receive. Our health care sector would be “private” in name only.

Once government controls those decisions, there will be nothing left to socialize. Make no mistake — this is a vote on socialized medicine.