October 22, 2019
 
United States House of Representatives 
Committee on Ways and Means 
1102 Longworth House Office Building 
Washington, D.C.  20515 
 
Dear House Ways and Means Committee Members and Staff: 
 
On behalf of the Center for Individual Freedom (hereinafter “CFIF”) and over 300,000 supporters and activists across the nation, I write to express our strongest opposition to H.R. 3, Speaker Nancy Pelosi’s legislation to upend America’s healthcare sector and impose socialized medicine upon the American public, and to express support for Representative Jodey Arrington’s proposed amendment to establish a Chief Pharmaceutical Negotiator in the Office of the United States Trade Representative as an alternative to foreign pharmaceutical price controls.   
 
American voters must understand that Speaker Pelosi’s proposal amounts to the most extremist effort undertaken to finally commandeer American healthcare.  Her bill includes an astonishing 95% tax on total pharmaceutical sales – not on profits, but sales – for private innovators, imposition of foreign price controls, a complete restructuring the popular Medicare Part D program and creation of a compulsory arbitration mechanism overseen by government bureaucrats. 
 
In a recent coalition letter to Congress signed by 70 conservative and libertarian organizations including CFIF, the implications of Speaker Pelosi’s draconian tax proposal were made clear: 

This means that a manufacturer selling a medicine for $100 will owe $95 in tax for every product sold with no allowance for the costs incurred.  No deductions would be allowed, and it would be imposed on manufacturers in addition to federal and state income taxes they must pay. 
 
The alternative to paying this tax is for the companies to submit to strict government price controls on the medicines they produce.  While the Pelosi bill claims this is “negotiation,” the plan is more akin to theft. 

Here’s the danger of price control proposals, which have suddenly become all too common in our ongoing healthcare reform debate, despite the fact that price controls fail every time they’re imposed, regardless of location, and regardless of the product targeted.  Foreign nations impose price controls by threatening to violate drug patents in order to sell generic copies if the targeted drug companies who own the patents fail to submit.  That constitutes extortion, and means that pharmaceutical innovators must either accept government-dictated prices or have their property simply commandeered. 
 
The direct consequence of price controls in nations that impose them is dramatically reduced access to new lifesaving and life-improving drugs.  Between 2011 and 2018, for example, consumers in the United States could access 70 of 74 new cancer drugs.  That’s a 95% access rate.  By comparison, only 74% of those new drugs were available to consumers in the United Kingdom, 49% in Japan and merely 8% in Greece. 
 
That, in turn, affects cancer survival rates.  The availability of new drugs is party why, according to The Wall Street Journal, “America outpaces 10 European countries on cancer survival rates.” 
 
Very few potential new drugs ever reach the consumer market, due to astronomical research and development costs, lengthy government safety reviews, laboratory tests of effectiveness, potential product liability lawsuits by plaintiffs’ attorneys, patent protection limitations and other bureaucratic demands.  Artificial price controls make it more difficult to recover the costs of new medicines and R & D, so fewer potential new drugs are pursued due to cost ineffectiveness. 
 
Even the United Nations World Health Organization recognized how price controls prevent new drugs from coming to market, in turn harming consumers: 

Every time one country demands a lower price, it leads to a 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. 

But that’s precisely what Pelosi’s legislation would do. 
 
America accounts for nearly two-thirds of all new pharmaceuticals introduced worldwide, precisely because of our more market-oriented pharmaceutical industry.  Instead of importing other nations’ price control schemes and suffering the consequences, we should be exporting our system to their shores. 
 
Representative Arrington’s amendment offers a wiser approach. 
 
Under his amendment, a Chief Negotiator will resist foreign nations’ efforts to obtain a free ride from pharmaceutical innovators by refusing to pay a fair price for critical innovations.  The Chief Negotiator will also possess authority to conduct trade negotiations and enforce trade agreements relating with other nations that undermine American innovators, curtailing their ability to coast on the investments and innovations of our pharmaceutical sector and the American workers behind them.  Instead of empowering foreign nations to harm our innovators, let’s empower the U.S. to stand up to foreign governments capitalizing upon American efforts and investment. 
 
Speaker 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 we urge Members of Congress to oppose H.R. 3, and to support Representative Arrington’s more commonsense amendment. 
 
Thank you very much for your attention to this important matter, and please contact me at your convenience with any questions or comments. 
 
Sincerely, 

/s/

Timothy Lee 
Senior Vice President of Legal and Public Affairs