2 The Julian News September 18, 2019
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Guest Editorial
The Dangerous Bipartisan
Enthusiasm For
Drug Price Controls
By Sandip Shah
For years, politicians have railed about the high cost of prescription
drugs. But now, they appear poised to take action. Democrats and
many Republicans want to impose price controls on medicines.
One proposal would allow patients to import price-controlled
medicines from Canada. Another would allow federal bureaucrats
to effectively dictate the price of medicines sold through Medicare's
prescription drug program. Yet another plan would index Medicare
reimbursements for advanced drugs to the artificially capped prices
paid in other developed nations.
All of these reforms would ultimately do far more harm than good.
Price controls would yield some short-term savings. But they'd also
choke off funding for drug development.
Drug development is one of the most expensive, risky enterprises
in the world. Of the few compounds that make clinical trials, just one
in 10 is approved for sale. It takes about 15 years and $2.6 billion to
make one new medicine.
There's no denying that some cutting-edge medicines are
expensive. New cancer drugs, for instance, often cost $10,000 or
more per month.
Fortunately, drugs don't stay expensive forever. After a drug's
patent expires, generics flood the market. This competition allows
patients to access lifesaving therapies for pennies on the dollar.
For example, one common therapy for bipolar disorder, cost $393
in 2010. Just five years later, after generics came to the market, the
drug cost a mere $8. A popular blood thinner, meanwhile, had a list
price of $166 in 2011. Today, patients can get that treatment for $5.
Drug companies risk billions to create new products. When they
succeed, they set prices high enough to recoup development costs
and earn profits. Then generic competition drives down prices. The
vast majority of prescriptions filled at U.S. pharmacies -- fully nine out
of 10 -- are generic.
And because innovators are rewarded for new discoveries, they
continue to invest in medical innovation. Thanks to new drugs, cancer
death rates have fallen 27 percent since the 1990s.
The future of drug development is bright. There are more than 8,000
drugs under development worldwide for myriad deadly diseases, like
cancer and stroke.
But patients will never see these cures if politicians implement
strict price controls.
That doesn't mean politicians should do nothing. There are good
ways to lower Americans' drug bills.
Encouraging more competition by speeding up drug approvals,
especially for generic drugs, would drive down prices.
Reforming the drug rebate system is another good idea. Right
now, drug makers typically offer discounts of 30 percent or more
to insurance plans. But insurers rarely use those discounts to help
patients save money. Requiring insurers to pass these savings
to patients at the pharmacy would make prescriptions far more
affordable.
The next generation of miracle cures is on its way, but only if
politicians don't squash pharmaceutical innovation with short-sighted
price controls.
Sandip Shah is the founder and president of Market Access
Solutions, a global market access consultancy, where he develops
strategies to optimize patient access to life-changing therapies.
* * *
We are descended from a people whose government was founded on liberty;
our glorious forefathers of Great Britain made liberty the foundation of
everything. That country is become a great, mighty, and splendid nation; not
because their government is strong and energetic, but, sir, because liberty is
its direct end and foundation.
— Patrick Henry
* * *
