Regrettably, the White House today announced an executive order that effectively imports drug price controls from foreign nations with socialized healthcare systems. We at CFIF strongly oppose the order and encourage immediate reconsideration. Below is CFIF President Jeffrey Mazzella’s statement:
“Price controls simply do not work, regardless of the product targeted or the location they’re attempted, and real-world experience establishes that pharmaceutical price controls are no different. The new executive order would impose what’s known as an International Pricing Index (IPI) for U.S. drugs administered by the federal government, meaning that foreign governments’ drug price controls would suddenly control our own reimbursement rates. That would upend our current system, which has actually already reduced the cost of the 50 most popular Medicare Part B drugs sold by approximately 1%. Our current system already includes the discounts negotiated between hospitals, healthcare plans and payers. In contrast, foreign governments whose price control schemes we would import don’t negotiate, but instead dictate prices while threatening to violate patent rights and employ a ‘take it or leave it’ approach.
“As a direct consequence of foreign nations’ price control approaches that disrespect patent rights, those nations receive far fewer new lifesaving and life-improving drugs than American consumers. For example, 96% of all new cancer drugs over the past decade were made available to U.S. consumers. In contrast, only 56% of those same drugs became available in Canada, only 50% became available in Japan and only 11% in Greece, as just three examples. Simply put, consumers in nations whose governments impose drug price controls don’t enjoy access to nearly as many new drugs as Americans, or nearly as soon. As The Wall Street Journal found, that’s why America outpaces European nations in terms of cancer survival rates, among other advantages.
“Even the Trump Administration itself has highlighted the destructive effect of importing foreign price controls. In 2018, its Council of Economic Advisers affirmed that, “If the United States had adopted the centralized drug pricing policy in other developed nations twenty years ago, then the world may not have highly valuable treatments for diseases that required significant investment.”
“Currently, the United States accounts for nearly two-thirds of all new drugs introduced worldwide, and our more market-oriented system and protection of patent rights explains why. Very few potential new drugs ever reach the market, due to astronomical research and development costs, lengthy government safety tests, laboratory effectiveness trials, possible product liability lawsuits, patent protection limitations and other bureaucratic hassles. Imposing artificial price controls would add to those headwinds by making it less possible to recover the massive costs of developing new medicines and R&D, leading to fewer new drugs for U.S. consumers.
“Instead of importing foreign nations’ price control schemes and their consequences, America should be exporting our superior system to their shores.
“Today’s executive order contravenes the Trump Administration’s broader agenda of deregulation, free-market approaches and strong intellectual property (IP) protections. Hopefully, the White House quickly realizes the potentially catastrophic consequences of this order, lest American consumers suffer in the same way as consumers in the foreign nations that impose the price controls that it now seeks to import.
“In his State of the Union Address earlier this year, President Trump reassured Americans that, ‘To those watching at home tonight, I want you to know that we will never let socialism destroy American healthcare.’ Unfortunately, the White House’s executive order announced today regarding drug prices would do precisely that.
“We therefore urge President Trump to reconsider this potentially catastrophic order in the strongest possible terms.”
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