The results are stark. Of 220 new drugs that came to market worldwide between 2011 and 2017, 87 percent were available in the United States, according to data from regulatory agencies. But in Germany, only 71 percent were available, in Great Britain, 67 percent, and in Japan, Canada, and France, the figure was less than half. Wherever they are enacted, drug price controls reduce the number of new medicines available to patients. This usually happens because companies, unable to afford the immediate financial hit of below-market prices, delay introducing their products in those countries. Shortages also crop up in government-controlled systems. Canadian pharmacists routinely report scarcities of everything from EpiPens to heart medication. French and British pharmacists have likewise reported shortfalls of essential medicine in recent years.
Foreign reference pricing schemes tie the price of prescription drugs in the United States to the amount paid in foreign countries. H.R. 3, for example, says that drugs sold in the United States cannot cost more than 120 percent of its average cost in six other countries — Australia, Canada, France, Germany, Japan, and the United Kingdom. Foreign reference pricing, as it is known, is the centerpiece of H.R. 3, a bill recently reintroduced in the House, and has popped up in other legislation as well. Unfortunately, it would put many life-saving treatments out of reach, and dry up funding for research into future medicines.
As it happens, the reference countries have socialized medical systems in which governments dictate drug price. They also have significant problems with access to medicine, which the United States would end up importing along with the price caps. Of course, new medicines cost money, which is why lawmakers are trying to lower out-of-pocket drug expenses for seniors. Amid these efforts, though, an idea that would do more harm than good has gained traction.
Finally, price controls would lead us toward a drug evaluation system that is particularly dangerous to seniors. Government-run healthcare systems have to choose which medicines to cover, and so have turned to a metric called a “quality-adjusted life year,” or QALY. Slashing drug-company income through price controls will slash the amount they invest into research and development. Estimates suggest that H.R. 3 would cut the industry’s research and development budget by $200 billion over a decade. We would never know what didn’t get invented as a result. But we could miss out on the next treatment for cancer, heart disease, or dementia.
Inventing medicines requires considerable private-sector investment. In fact, it costs a pharmaceutical company nearly $3 billion to bring a new prescription drug to market, according to a study in the Journal of Health Economics. But those are just the near-term effects. Foreign reference pricing would also curtail new drug development, which would be even worse for seniors in the long run.
The News Highlights
- Foreign reference price schemes would harm the health of the elderly – Whittier Daily News
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