Freedom Line Blog

The U.S. House Energy & Commerce Committee’s Health Subcommittee today will host the third hearing in its health care affordability series, specifically examining the role providers and hospitals play in shaping the cost of care for Americans.

While the hearing will likely examine numerous issues, there is none more ripe for reform than the flawed 340B drug pricing program.

Originally enacted to help eligible safety-net providers buy medicines at steep discounts and pass the savings on to lower-income and vulnerable patients, the program has ballooned as a revenue stream for many participating hospitals and contract pharmacy chains.

As the size and complexity of the 340B program has expanded, participating hospitals and contract pharmacies have instead used the program to increase their own revenues – to the tune of $1.8 billion from 2024 to 2025 alone – rather than helping consumers, who were the law’s intended beneficiaries.

Study after study into that failure over the years has exposed how participating providers hoard tens of billions of dollars each year from drug sales occurring under the 340B program.  In fact, some of those hospitals went so far as to charge full prices to patients for discounted drugs, only to pocket the difference.  Federal agencies tasked with administering the 340B program have highlighted transparency concerns and the inability to accurately audit the program.

Fortunately, the Trump Administration has offered a proposal to actually improve matters for consumers.

Under the administration’s proposal, the 340B program would require hospitals to file claims with drug manufacturers for rebates, rather than the current process of granting those hospitals up-front drug price discounts.  With that change, the program would create a paper trail to prevent hospitals from exploiting the discounts in the shadows.

There have been similar successful real-world reforms enacted in other federal drug pricing programs such as the Medicaid Drug Rebate Program of 1990 and the Department of Veterans Affairs Federal Supply Schedule.  Each of those reforms created a more transparent paper trail that enhanced program efficiency in the way that the Trump Administration’s 340B program reform idea proposes.

Simply put, the 340B program, however well-intentioned, has proved to be a prescription for disaster.  In practice, its murky logistics has ended up benefiting participating providers at the expense of patients and increased healthcare costs.

Accordingly, as Congress continues its effort to reduce healthcare costs, it should focus on where reform and savings constitute low-hanging fruit:  the 340B program and the way it has to date served the interests of participating hospitals rather than patients.

Today, the House Energy & Commerce Committee holds a hearing entitled “Lowering Health Care Costs for All Americans: An Examination of the Prescription Drug Supply Chain” that offers another opportunity to advance substantive reform.

CFIF applauds the Committee, and members Brett Guthrie (R – Kentucky) and Morgan Griffith (R – Virginia), for their collective efforts on this issue of affordability.  In that effort, we also continue our own effort to emphasize the importance of avoiding destructive government price controls, which only serve to make lifesaving pharmaceuticals less available to Americans, not more available.  It’s also critical to maintain focus on ongoing reform in the pharmaceutical benefit manager (PBM) arena, which actually can bring improvement, as we’ve consistently emphasized:

For those unfamiliar, Pharmacy Benefit Managers (PBMs) amount to middlemen that control prescription drugs for millions of Americans.  A majority of Americans receive health insurance through employer plans or government programs such as Medicare, which in turn cover prescription drugs through PBMs.  Those PBMs negotiate with drug companies and pay pharmacies, but throughout the process determine the drugs that insured patients may obtain and at what cost.

The problem is that PBMs operate in such an opaque and complex manner that they’re able to inflate drug costs while claiming to be working to reduce them.  It has reached a point where even the Federal Trade Commission (FTC) is now investigating PBMs’ role in driving up costs for Americans.”

Another critical arena offering potential reform? What’s known as Section 340B:

At issue is Section 340B of the Public Health Service Act passed in 1992 to help hospitals – especially those serving low-income and uninsured populations – to purchase pharmaceuticals from drug manufacturers at significantly discounted prices.

In theory, those savings for hospitals should have translated into lower out-of-pocket prices for everyday patients by being passed along to them.

Since 1992, however, real-world practice has not lived up to that laudable Congressional intent.  As the number of participating hospitals and pharmacies has grown, oversight has failed to keep pace with the scale and complexity of the program.

As a result, hospitals and their partner pharmacies have increasingly exploited the 340B program in ways that bring significant revenue streams for themselves, but no demonstrable benefits for the consumers who were the law’s original intended beneficiaries.  Multiple studies examining the growing discrepancy have exposed how hospitals and their partners generate tens of billions of dollars each year from 340B drug sales.  Rarely, however, have those funds been passed on to patients in the form of lower drug prices or even reinvested into better patient care.

Outrageously, some hospitals even charged full prices to patients for pharmaceuticals discounted under the 340B program, and then pocketed the difference rather than pass them on to consumers as designed.  The federal agency in charge of administering the 340B program has highlighted those transparency concerns and an inability to accurately audit the program in practice.

Accordingly, since 1992 the 340B program hasn’t fulfilled its intended aspirations.  Instead of reducing drug costs for patients, it has too often incentivized hospital profiteering, distorted healthcare behavior and ultimately raised costs rather than lowering them.”

Our message is clear:  Keep up the positive work, and focus on reform where it works, while avoiding the catastrophic potential pitfalls of drug price controls, whether through so-called “Most Favored Nation” (MFN) or other iterations, or erosion of strong patent rights that make American pharmaceutical innovation the envy of the world.

In order to lower healthcare costs for all Americans, a pivotal and necessary realm to address remains health insurance.

It’s therefore appropriate that the United States House of Representatives Committees on Ways & Means and Energy and Commerce will hold a timely hearing this week with executives representing major U.S. insurance companies.

Currently, the health insurance industry remains highly concentrated while American consumers continue to pay higher and higher healthcare costs.  At a deeper level, Pharmacy Benefit Managers (PBMs) amount to middlemen that control prescription drugs for millions of Americans.  A majority of Americans receive health insurance through employer plans or government programs such as Medicare, which in turn cover prescription drugs through PBMs.  Those PBMs negotiate with drug companies and pay pharmacies, but throughout the process determine the drugs that insured patients may obtain and at what cost.

The problem is that PBMs operate in such an opaque and complex manner that they’re able to inflate drug costs while claiming to be working to reduce them.  It has reached a point where even the Federal Trade Commission (FTC) commenced an investigation of PBMs’ role in driving up costs for Americans.

That’s why this week’s hearing with insurance company executives is so important, and offers such a critical opportunity to make real, meaningful progress on the ongoing concern to American consumers.

It’s critical to emphasize that the answer to healthcare affordability doesn’t lie in counterproductive drug price controls or violating critical patent protections for pharmaceutical innovators.  That would do nothing to lower healthcare costs, and would instead only make critical lifesaving pharmaceuticals and healthcare innovations less available to Americans.

To improve consumer access and affordability, let’s achieve real reform where it matters – at the health insurance and PBM levels.

As the United States Senate Finance Committee convenes today for a meeting entitled “The Rising Cost of Health Care:  Considering Meaningful Solutions for All Americans,” the enduring adage of medical care applies:  Do no harm.

Specifically, as we’ve detailed at CFIF, we must especially avoid potentially catastrophic ideas like drug price controls (whether through so-called “Most Favored Nation” (MFN) programs or any other) and violations of patent and intellectual property (IP) protections in which the United States leads the world.  Indeed, our more free-market approach explains why America leads the world in lifesaving healthcare innovation, accounting for an astonishing two-thirds of all new drugs introduced to the world each year:

The reasons that MFN schemes would only exacerbate existing problems are several.

First, drug price controls depress innovation in foreign nations such as those in the European Union (EU) that practice them.  That’s because drug innovation requires massive investments in research and development (R&D), often exceeding $2.6 billion to bring each new potential drug to the consumer market.  Consequently, when foreign governments impose artificially low prices, they necessarily strip pharmaceutical innovators of the revenue required to fund new treatments.  As a result, fewer breakthrough therapies arrive, and the slowdown in medical advances can cost lives.

As noted above, that consequence isn’t hypothetical or open to debate.  To wit, the more market-oriented U.S. accounts for an astounding two-thirds of all new drugs introduced to the world, far above our share of the world’s population or economic production.  That’s no accident or coincidence.

Second, and partly as a consequence of the dynamic described immediately above, drug price controls reduce access to lifesaving drugs.  Nations that impose them suffer from delayed drug availability and restricted access, whereas the newest and most effective pharmaceutical innovations typically reach the U.S. market first.

To illustrate, of 270 medicines introduced in the U.S. from 2011 through 2018, only 53% became available in France, 64% in Britain and 67% of them in Germany.  Only 52% of that 270 became available to Canadians, 41% to Australians and 48% to the Japanese.

If the U.S. were to adopt MFN pricing, it would foolishly import those foreign delays and access restrictions, in turn reducing American consumers’ access to cutting-edge treatments.”

Along the way, the Committee should also highlight the perils of continued subsidies for ObamaCare and the potential benefits of other patient-centered reforms like health savings accounts (HSAs) and Section 340B reform.  Healthcare costs remain an important concern for Americans, and we must promote federal policies that improve matters for consumers and patients, not harm them.

In our latest Liberty Update, CFIF highlights the debut of the “Most Favored Patient” initiative, which offers the optimal blueprint going forward for lower drug costs, greater access and better healthcare.

Well, the policy heavyweights behind Most Favored Patient come from the group at Unleash Prosperity, including Steve Forbes, Stephen Moore, Phil Kerpen, and Thomas Philipson.  And in addition to their new work at Most Favored Patient, they’ve unveiled a new commentary explaining how drug prices in the U.S. are actually cheaper than in other developed nations with which we’re often unfairly compared:

It IS true that Americans pay more for new drugs under patent. That, of course, is because American pharmaceutical companies spend billions of dollars inventing the major breakthrough drugs and the rest of the world free-rides on those R&D costs.

But most drugs consumed in the U.S. are generics. Those prices are cheap. And generics last forever, whereas a patent lasts 10 to 20 years before generics take over.

A new blockbuster study by UP senior fellow Tomas Philipson has two amazing findings:

First: “The U.S. has the highest generic market share (93 percent).”

Second: “The U.S. has some of the LOWEST generic prices among developed countries.” Medicare and Medicaid pay almost 20% less for prescription drugs than in Europe, Canada, and the U.K. It is true Americans pay more for the patented drugs, but many residents of countries with socialized medicine don’t have access to these drugs at virtually any price because of socialist price controls and government-run health care.”

Along the way, they offer this helpful illustration:

This offers just a sample of the great work from Unleash Prosperity, and also the sort of policy insight that we can anticipate from Most Favored Patient.

In this week’s Liberty Update, we highlight how Kamala Harris isn’t even bothering to conceal her goal of abolishing private health insurance in America.  Whereas Barack Obama earned PolitiFact’s 2013 “Lie of the Year” for assuring America that, “If you like your healthcare plan, you can keep it,” Harris just openly advocates ending private healthcare plans completely.  Some pro-socialized medicine extremists claim that the 80% of Americans who prefer private insurance are somehow oblivious to its cost.  In a letter in today’s Wall Street Journal, however, a wise reader notes that government plans cost even more:

[T]he average annual cost of Medicare per beneficiary in 2022 (the latest data) was $15,727.  For a retired couple, that’s $31,454 a year, or 30% more than private coverage for a whole family.”

A second reader further notes that while someone with employer-provided private insurance can at least see how much is taken out of his or her paycheck, we have no idea how tax dollars that subsidize government plans are inefficiently used within the murky interiors of the federal bureaucracy.

Today, the House Oversight Committee is holding an important hearing entitled “The Role of Pharmacy Benefit Managers in Prescription Drug Markets Part III:  Transparency and Accountability.”

For those unfamiliar, Pharmacy Benefit Managers (PBMs) amount to middlemen that control prescription drugs for millions of Americans.  A majority of Americans receive health insurance through employer plans or government programs such as Medicare, which in turn cover prescription drugs through PBMs.  Those PBMs negotiate with drug companies and pay pharmacies, but throughout the process determine the drugs that insured patients may obtain and at what cost.

The problem is that PBMs operate in such an opaque and complex manner that they’re able to inflate drug costs while claiming to be working to reduce them.  It has reached a point where even the Federal Trade Commission (FTC) is now investigating PBMs’ role in driving up costs for Americans.

Today’s House Oversight Committee hearing accordingly offers invaluable assistance in alerting Americans to PBMs’ ongoing role in unnecessarily increasing drug prices for consumers, and hopefully helps propel reform in this critical realm.

In our contentious national healthcare debate, there’s one point on which we can all find a rare point of consensus:  the benefit of achieving greater transparency in medical billing and fees.  

Unfortunately, the manner by which the Biden Administration has implemented the “No Surprises Act” that took effect on January 1 so far has failed to protect consumers from obscure and needless insurance costs.  Although the No Surprises Act aimed to reform the out-of-network reimbursement process, some insurance companies continue to exploit what are known as “shared savings fees,” which in turn keeps costs higher than necessary for both employers and their employees alike.  

The Department of Labor, however, can help rectify the problem by requiring greater transparency going forward.  

By way of background, “shared savings fees” derive from out-of-network medical claims, and more specifically refer to out-of-network cost-management fees.  They’re sold to health insurance plan sponsors, typically employers, as a form of protection against surprise medical bills charged to employees.  In other words, shared savings fees ostensibly provide a mechanism for employers to save money by lowering out-of-network healthcare costs when they arise.  

The problem is that in practice, they often impose hidden fees that result in higher premiums and dubious benefits for plan sponsors and covered employees, as we explained alongside a dozen other free-market organizations in a recent coalition letter to the U.S. Secretary of Labor:    

In some cases, shared savings fees exceed total administrative fees for many plan sponsors, and some may not even be aware of the total amount they are paying in those fees.  That is partly a function of a significant lack of transparency, since insurance companies do not routinely report their revenues from shares savings programs.  Unfortunately, the No Surprises Act does not directly address those fees, and we believe that insurers should more responsibly disclose the fees that plan sponsors are charged every year to help reduce healthcare prices for millions of American families.   

The No Surprises Act should’ve made shared savings fees unnecessary.  As long as shared savings fees continue to exist as “administrative fees,” the problem of higher healthcare costs and fewer choices for consumers will fester.  The Labor Department must therefore require higher transparency and full disclosure to employers and other health plan sponsors regarding shared savings fees to help resolve this outstanding and wholly unnecessary problem.  

Gallup just released a new survey summary under the sobering headline “Americans Sour on U.S. Healthcare Quality,” but what’s perhaps most notable is when the distinctive downturn began — as ObamaCare took effect and government control over our healthcare increased significantly:

We at CFIF often warn how attempts at “drug price controls” will only succeed in killing lifesaving drug innovation, in which the U.S. leads the world without a close second.

Joe Biden’s so-called “Inflation Reduction Act” constitutes a perfect illustration, and in a Wall Street Journal piece entitled “The Inflation Reduction Act Is Already Killing Potential Cures,” USC Schaeffer Center for Health Policy & Economics fellow Joe Grogan shows how “we’re already getting signs of the damage”:

One poorly crafted provision is driving companies away from research into treating rare diseases.  In its Oct. 27 earnings statement, Alnylam announced it is suspending development of a treatment for Stargardt disease, a rare eye disorder, because of the company’s need ‘to evaluate impact of the Inflation Reduction Act.’  Alnylam’s decision turns on a provision in the Democrats’ bill that exempts from price-setting negotiations drugs that treat only one rare disease.  The company’s drug is currently marketed as treating only amyloidosis, and thus is exempt from Medicare’s price setting.  If Alnylam proceeded with research into treating Stargardt, it would lose its exemption.”

And that’s not even the end of it.  Earlier this week, Eli Lilly announced termination of a blood cancer drug because, “In light of the Inflation Reduction Act, this program no longer met our threshold for continued investment.”

Mr. Grogan proceeds to offer a must-read primer on how and why this is happening, then concludes by admonishing the next Congress convening in January to abandon this instant disaster and promote innovation instead of cheap Biden Administration talking point schemes:

The Democrats may have achieved a short-term talking point for the midterm elections, but in the long term this partisan healthcare bill will prevent patients from receiving innovative, lifesaving treatments.  A new Congress would serve Americans well by replacing the Inflation Reduction Act with an approach that recognizes the need for economic incentives to bring new treatments to patients.”

Good advice.

In the wake of this month’s catastrophic election results for Joe Biden and his party, many leftists stubbornly rationalized that voters were upset that Biden hadn’t seen more of his agenda passed, and that the answer to Biden’s and Democrats’ ills was to step on the gas and pass more of that agenda.  Well, the new ABC News/Washington Post poll offers and instant rebuttal.  The survey is nothing short of catastrophic for Biden and Democrats as 2022 approaches, with Republicans scoring record preferences (see image below).  But note something else:  This poll was conducted November 7 – 10, AFTER Biden’s “infrastructure” spending bill was passed.

“Build Back Better” Is a Loser

We at CFIF have detailed the catastrophic potential effects of passing Biden’s even larger spending bill currently before Congress, including its potentially devastating consequences for American healthcare and pharmaceutical innovation:

Specifically, they’re attempting to cement agreement on provisions that would empower the federal government to begin “negotiating” drug prices with manufacturers and imposing draconian penalties upon providers that don’t play ball.

That constitutes a scheme to bring price controls to American healthcare, with catastrophic effects, according to analyses from both the non-partisan Congressional Budget Office (CBO) as well as the University of Chicago.”

This new ABC News/Washington Post poll should offer a cautionary tale for Senators Joe Manchin (D – West Virginia), Kirsten Sinema (D – Arizona) or anyone else even contemplating voting for it.

In this week’s Liberty Update we highlight the potentially catastrophic threat of H.R. 3, the healthcare and drug price control bill that Joe Biden and Nancy Pelosi are attempting to rush through Congress.  The Wall Street Journal helpfully offers further insight this morning on how H.R. 3 would threaten lifesaving U.S. pharmaceutical innovation and leadership, including on things like the Covid vaccines:

Companies that refuse the government’s price must pay a 95% excise tax on all revenue they generate from that drug in the U.S.  They’d also have to offer the government price to private insurers.  There’s no “negotiation” when a gun is pointed at your head.  A new study in the Journal of the American Medical Association estimates that drug spending in the U.S. would have been 52%, or about $83.5 billion, lower in 2020 based on the bill’s formula.  The research outfit Vital Transformation estimates the bill would reduce bio-pharmaceutical earnings by $102 billion a year…

The hugely successful mRNA Covid vaccines are the result of years and billions of dollars in research.  BioNTech initially set out to create cancer vaccines and linked up with Pfizer in 2018 to work on a more effective flu vaccine.  Biotech firms are trying to use mRNA technology for personalized cancer vaccines, autoimmune treatments and gene therapies.”

Americans cannot allow Biden, Pelosi and Schumer to jeopardize our future health on behalf of their hyper-partisan agenda.

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.

Although the year 2020 was a trying one in so many ways, one bright spot that we at CFIF repeatedly highlighted is the wondrous way in which America’s pharmaceutical sector came to the rescue, achieving in one year what typically takes a decade or more:  devising and perfecting not one, but multiple lifesaving vaccines.  It’s therefore no surprise, but welcome nonetheless, that Americans’ approval of our healthcare sector and its workers skyrocketed.  Their remarkable achievements have not gone unnoticed:

Medical Sector Approval Skyrocketed

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.

Senator Martha McSally (R – Arizona) has broadly proven herself a stalwart ally of conservatives, libertarians and the Trump Administration in her brief tenure on Capitol Hill.  A former U.S. Air Force A-10 pilot, her votes have confirmed President Trump’s phenomenal array of judicial nominees and advanced his economic agenda to bring us arguably the greatest economic conditions in history.

She must be careful, however, to avoid potentially catastrophic missteps on the issue of healthcare and prescription drugs.

Specifically, Sen. McSally has introduced legislation and supported other Senate Finance Committee proposals that would introduce drug price controls from socialist foreign healthcare systems to the U.S., empower the Department of Health and Human  Services (HHS) to directly and bureaucratically negotiate pharmaceutical prices, allow importation of potentially dangerous drugs from foreign countries and introduce components that would erode our world-leading patent system.

It’s not by accident that the U.S. accounts for over two-thirds of all new lifesaving and life-improving pharmaceuticals introduced to the world – it’s the direct result of our strong patent protections here, and our more market-oriented approach.  In contrast, foreign nations that have introduced the principles contained in some of Sen. McSally’s legislation and bills that she supports inevitably suffer shortages, as even the United Nations World Health Organization (WHO) has acknowledged:

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.

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 the Canda, 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.

Senator McSally mustn’t sacrifice her conservative principles on behalf of prescription drug legislation that will make matters worse for American consumers, not better.  She should withdraw her proposed bill and renounce the Senate Finance Committee’s proposal, and instead support more market-based solutions that have proven effective not only with pharmaceuticals, but across all economic realms.

Alongside other conservative and libertarian organizations, we at CFIF have been highlighting the clear and present danger of Nancy Pelosi’s (D – California) proposed healthcare legislation H.R. 3 in letters to Congress and commentaries.

Pelosi’s bill includes an astonishing 95% tax on total pharmaceutical sales – not on profits, but sales – for private companies that don’t play ball to Pelosi’s satisfaction. Her proposal would also impose foreign price controls, completely restructure the popular Medicare Part D program, and create a compulsory arbitration mechanism overseen by government bureaucrats…  Pelosi’s legislation would jeopardize nearly $1 trillion in U.S. pharmaceutical investment, undermine patent protections, suffocate drug innovation and ultimately punish consumers. That’s far too high a price to pay, and responsible members of Congress must therefore stop Pelosi’s bill in its tracks.”

Now, a new nonpartisan Congressional legal analysis suggests that it’s also likely unconstitutional.  In fact, the report cites three separate provisions of the Constitution that Pelosi’s effort to commandeer Americans’ healthcare choices under federal bureaucrats’ control:

The Program created by Title I raises a number of legal considerations.  First, because the negotiation under the Program is intended to lower the prices manufacturers can charge for certain selected, single-source drugs, the Takings Clause of the Fifth Amendment may be implicated.  Second, the Program’s enforcement mechanisms – the excise tax and civil monetary penalties – may raise questions relating to the scope of Congress’s taxing power and the Excessive Fines Clause of the Eighth Amendment.  Third, the Program’s limitation on judicial review may prompt questions regarding Congress’s powers to limit the subject matter jurisdiction of Article III courts.  Finally, in setting forth the parameters of the Program, the language of Title I may implicate certain statutory interpretation questions.”

There’s reason enough for Congress to resolutely reject Pelosi’s H.R. 3 due to the negative impact that her proposal would inflict upon Americans’ healthcare, our world-leading pharmaceutical innovators and our healthcare industry more broadly.  The fact that it’s likely unconstitutional offers another reason to avoid the protracted sort of legal battles that would ensue, so that Congress can work toward solutions that actually improve American healthcare, like stronger patent protections and free-market principles.

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.

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.

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.