Freedom Line Blog

In the ongoing debate over healthcare reform, it’s important to keep our collective eye on the ball.  In that vein, as CFIF has repeatedly emphasized, we must ensure that free market principles prevail, and that includes protecting patent rights rather than weakening them.  Otherwise, American consumers will pay the price in fewer pharmaceutical innovations, shortages and worse health outcomes.

After all, as we’ve often pointed out, it’s not by accident that the United States accounts for an astonishing two-thirds of all new pharmaceuticals in the world.  That reflects the fact that we lead the world in intellectual property (IP) protections and avoid the destructive price controls that nations favoring socialized medicine impose.  As a consequence, patients in those countries don’t receive the new lifesaving and life-enhancing drugs that we do.

Unfortunately, there’s bad news to report in that regard, as Representative David Cicilline (D – Rhode Island) has introduced the misnamed “Affordable Prescriptions for Patients Through Promoting Competition Act.”  Most conspicuously, his proposal would begin prohibiting patent protections for pharmaceutical innovators developing improvements to their existing products.

Here’s why this is important.  Existing laws that have made us the most innovative nation in history allow for patent protection for new and useful improvements to existing pharmaceuticals.  Such improvements can help patients in such ways as eliminating side effects, reducing the necessary frequency or dosage, enhancing potency, boosting effectiveness or even addressing other illnesses beyond the drug’s original purpose.

But if innovators can no longer expect patent protections for the billions of dollars and years of hard work invested in developing them, then those innovations will begin to dry up.  Developing new or improved drugs typically requires over 10 years, and only approximately 10% of new discoveries actually make it to market after regulatory approval.  Accordingly, we must enhance the prospect that the fruits of innovators’ labors will be obtainable, not diminish them.

Representative Cicilline’s proposed bill is therefore a potentially catastrophic one for American consumers, who rely upon pharmaceutical innovators more and more to save lives and maintain health.  We therefore call upon all Members of Congress to oppose it.

In an excellent piece in today’s Wall Street Journal, Scott Atlas of Stanford University highlights how Americans enjoy far greater access to new lifesaving drugs than patients in Europe and elsewhere, and how the movement to impose government price controls would only restrict access to new drugs and degrade Americans’ health outcomes, as we at CFIF have been emphasizing:

America has superior treatment results for virtually all serious diseases reliant on drug treatment, including cancer, heart disease, stroke, high blood pressure and diabetes.  Price controls would jeopardize that advantage…

Pegging drug prices to those of foreign countries, as both Bernie Sanders and Donald Trump have proposed, would ultimately lead to the same consequences Europeans endure – reduced access to critical drugs and worse outcomes, including more deaths from disease.”

Mr. Atlas also notes how the Trump Administration has taken positive steps toward actually reducing drug prices, by targeting rebates received by pharmacy-benefit managers (PBMs) from drug manufacturers:

The Trump Administration has announced a proposal to do away with rebates paid by drug manufacturers to pharmacy-benefit managers, replacing them with discounts to beneficiaries at the point of sale.  PBMs are middlemen that control ‘formularies,’ the lists of drugs covered by a plan.  Rebates from drug companies to PBMs are payments for influence – either to position a drug on the formulary as ‘exclusive’ or to give it preferred status over competitors.

PBMs act counter to patient interest while aggravating the lack of price transparency.   These complex behind-the-scenes payments – $179 billion in 2016 – reward inflated list prices, on which patient premiums are often based.  This prevents patients from taking account of price…  Go-betweens like PBMs should be eliminated.”

Finally, and just as critically, Mr. Atlas adds that weakening patent and intellectual property (IP) rights would constitute a particularly destructive course:

Drugs are the most significant reason for the past half-century’s unprecedented gains against deadly disease.  But policies that aim to reduce drug prices – price regulation and weaker patent protection – are also associated with delayed availability, less innovation, and limited access.”

Mr. Atlas delves into statistics showing the enormous advantage that Americans enjoy in terms of new drugs and health outcomes, and his piece is well worth the full read.  Hopefully policymakers at all levels of government are listening.

We at CFIF have been emphasizing the threat posed by new drug price controls inexplicably contemplated by the Department of Health and Human Services (HHS).  In December, CFIF filed formal Comment opposing that ill-advised proposal, and hopefully wiser minds will prevail before the damage is done.  In similar vein, The Wall Street Journal ran a welcome commentary entitled “The Drug Price-Control Threat” on January 8 of this year, and a followup letter from reader Bruce Zessar of Highland Park, Illinois in today’s edition offers a personal, real-world illustration of what could be lost:

Insulin isn’t the same now as when it was discovered a century ago.  My wife is a Type I diabetic, diagnosed when she was 14 in 1980.  She has been a beneficiary of the tremendous advances in insulin therapy during the last four decades, including Lantus and Humalog.  When we got married in 1990, she had to live on a rigid schedule, eating lunch at, say, noon, and then dinner by 6:30-7:00 every day.  That’s becaue of the way prior insulin therapies worked in managing blood sugar.  With the invention of Lantus and Humalog, she can now live a normal life like everyone else.

Insulin is a shining example of why drugs deserve the utmost patent protection to encourage continual innovation.”

Price controls have never worked in any nation that has tried them, or with any commodity.   Few, if any, products are as important to our lives as America’s world-leading pharmaceutical sector, and we mustn’t let the price control scheme contemplated by the HHS kill the goose that continues to lay golden eggs.

In our recent weekly Liberty Update commentary entitled “On Pharmaceuticals, HHS Contemplates Disastrous New Price Controls,” we explain how government price controls undermine intellectual property (IP) rights, stifle American innovation and ultimately punish consumers in the form of fewer new pharmaceuticals.  We therefore encourage the Trump Administration to rethink a toxic new proposal along those lines, and instead pursue a course more in accord with its generally excellent stewardship of our economy and markets to date.

In his latest weekly commentary entitled “Not Healthy to Be Naive,” John Stossel agrees, and in a nice blurb explains the real-world consequences of drug price controls:

[G]overnment-run systems save money by freeloading off American innovation.  American drug companies, funded by American customers, fund most of the world’s research and development of pharmaceuticals.  New drugs and devices are expensive, so sometimes in Britain, says Pope, ‘whenever a new drug comes on the market that can save lives, the government just doesn’t have the funds to pay for it.’

Patients, accustomed to accepting whatever government hands out, don’t even know about the advances available elsewhere.  Single-payer systems also save money by rationing care.  Hence the long waiting times for treatments declared ‘nonessential’ in Canada, Britain and, for that matter, at American veterans hospitals.”

Hopefully, the Trump Administration is listening and corrects course.

Maligning pharmaceutical enterprises is a curious perennial dance, one that becomes even more active during presidential campaign seasons.  That always struck me as odd, since it seems a sign of societal advance that we can complain about the price of something that saves lives and improves living conditions rather than lamenting its nonexistence.

Regardless, the U.S. Chamber of Commerce’s Global Intellectual Property Center (GIPC) offers an instructive corrective entitled “4 Charts Explain the Economics of Drug Development.”  It is worth the brief examination and passing on to others, because it helps rebut many of the politicized myths that threaten the goose that lays the golden eggs:

“It’s not just the science that goes in to developing medicines that’s complicated.  The economics that drive the industry, allowing resources to be available so people can have access to beneficial new medicines is complicated, too.”

Each chart is worth 1,000 words, but the four broad takeaways are:  (1)  It takes ten years and $2.6 billion to bring a single drug to market;  (2)  In 2014, pharmaceutical companies spent $51.2 billion on research & development;  (3)  Only a few drugs, however, become commercial successes;  and (4)  The end result is that pharmaceuticals’ enormous investments result in people living longer and better lives.

Something to keep in mind as sometimes silly presidential campaigns get even sillier, at least in terms of maligning the innovative pharmaceutical industry.

Fox News reports that ATF’s Fast and Furious botched gun-tracking operation to Mexican drug cartels didn’t stop at encouraging private gun owners to sell to known criminals with assurances of surveillance.  Six months before Border Patrol Agent Brian Terry was murdered with one of these weapons, ATF supervisors in Phoenix directed field agents to sell the guns directly.

The result was the same as when the guns came from private sellers: no surveillance was initiated by ATF to track the guns.  Instead, the buyers for the cartels were allowed to store them in a stash house and ship them south with impunity.

These are the kinds of revelations that get bureaus like ATF shut down.  Could it also be the scandal that sinks Attorney General Eric Holder, the man who oversees ATF’s operations?

Read the whole story here.

Writing for Big Government, AWR Hawkins asks the obvious question about the political hot potato being passed around by President Barack Obama, Attorney General Eric Holder, and interim ATF director Ken Melson – none of whom claim any “substantive” knowledge about a federal program to arm Mexican drug dealers.

In other news, on July 5^th Jack Tapper (ABC News) peppered Obama’s White House Press Secretary with questions about “Fast and Furious” in front of the rest of the press reporters, but the most substantive answer that Jay Carney gave was: “The president takes this very seriously.” (In all fairness to Carney, he’s clueless because Obama keeps him clueless.)

Look folks, this is ridiculous. Where is Chris Matthews? Where is that Keith guy who used to work for MSNBC? Where are all the freaks who wanted to hang George W. Bush in effigy for supposedly-lying about Iraq?

Why are they silent in the face of so great a cover-up?

Probably because the “Gunrunner” and “Fast and Furious” projects have too many inconsistencies to tolerate; better to just ignore them.  A liberal president presides over the intentional escalation of a narco-fueled civil war.  His celebrated AG fails yet again to faithfully execute his oversight responsibilities.  And the man charged with ensuring that alcohol, tobacco, firearms, and explosives don’t fall into the wrong hands is at the head of a bureaucracy actively peddling the most lethal one (guns) to obtain the others.

With Border Patrol Agent Brian Terry killed as a result of guns used in the ATF program, isn’t it about time to get an updated (and much more accurate) version of “Bush lied, people died”?

He’s no John Dean, but ATF Agent Jay Dobyns is flatly contradicting the President of the United States and the U.S. Attorney General on what they knew and when.  The controversy involves ATF’s Project Gunrunner and its offshoot, Operation Fast and Furious.  Both initiatives deliberately allowed military style firearms to “walk” into the hands of Mexican drug cartels, some of which were used to kill American citizens.

In an interview with Fox News‘ Andrew Napolitano, Dobyns said that despite Attorney General Eric Holder’s congressional testimony that he only found out about the programs “a few weeks ago,” both he and the president were aware of the recklessness of each program.

Dobyns also made the startling assertion that “the president and the attorney general are aware of the conclusions that those guys (Newell and Gillett) operate ATF’s business in a reckless and dangerous way, and they did nothing about it.”

During questioning by both the House and Senate Judiciary Committees last week, Holder insisted he did not know about Project Gunrunner’s problems until only “a few weeks ago.” However, this column reported Tuesday that Sen. Grassley personally delivered two letters about Gunrunner to Holder at a meeting Jan. 31 in his office.

The more details that emerge about these programs, the less likely it seems Eric Holder will be back for a second tour of duty at the Justice Department.  If so, thank goodness.

National Rifle Association CEO Wayne LaPierre has a clever response to Attorney General Eric Holder’s claim he didn’t authorize an agency he oversees to sell guns to known criminals and “let them walk” into the hands of Mexican drug cartels.

“He’s the attorney general of the United States of America — the highest law-enforcement officer in our land,” LaPierre said. “Who’s in charge? If he didn’t know, then who’s minding the store? If Holder didn’t know, Holder has got to go.” (Emphasis added)

The programs at issue, Project Gunrunner and Operation Fast and Furious, are initiatives run by the Bureau of Alcohol, Tobacco, and Firearms (ATF) that attempted to track the post-sale movement of guns used in violent crimes.

Disastrously, at least one U.S. Border Patrol agent has been killed with a gun linked to the ATF initiative.

With all his other missteps, this could be the fiasco that ultimately removes Eric Holder from power.

National Reivew’s Victor Davis Hanson joins the call to get Eric Holder out of the Attorney General’s office with a parade of horribles similar to CFIF’s position.  With all the evils confronting American law enforcement – a drug-fueled Mexican civil war, human trafficking, and terrorist threats from naturalized citizens like Faisal Shahzad – it is stunning to think that the nation’s top prosecutor can’t seem to see his job as anything other than the highest profile assignment desk of the ACLU.

Hopefully, it won’t take an avoidable tragedy to convince President Barack Obama that Holder is a national liability as long as stays at his post.

Sports and politics have once again collided.  Responding to a protest of sorts by the NBA’s Phoenix Suns, Arizona Governor Jan Brewer penned a special to ESPN.com disputing misinformation about SB 1070.  The governor took the unusual step because of calls for boycotting Arizona-based sports events, among other venues.

Along with a few purple prose moments with sports metaphors, Brewer lays out the hard facts about the federal government’s failure to enforce immigration laws.  In 2009, there were 316 kidnappings in Phoenix, making it the nation’s kidnapping capitol.  Today, there are approximately 6,000 prisoners in Arizona who are foreign nationals costing state taxpayers roughly $150 million a year.

Getting back to the boycott issue, Governor Brewer makes an assertion no one can reasonable disagree with:

A boycott that would actually improve border security would be to boycott illegal drugs. Dramatically less drug use and production would do wonders for the safety of all our communities.

We’ll see how that goes over.