It’s a new year, but sadly Congress is still pursuing flawed price setting policies

Here’s a refresher on why the drug pricing provisions in the BBBA are bad policy.

Nicole LongoJanuary 25, 2022

It’s a new year, but sadly Congress is still pursuing flawed price setting policies.

As we kick off 2022, Congress has a number of priorities they are aiming to tackle, including the Build Back Better Act (BBBA). Unfortunately, the bill includes policies that would take the unprecedented step of allowing the government to set the price of certain medicines in Medicare. Here’s a refresher on why the drug pricing provisions in the BBBA are bad policy.

Disincentivize further research after a medicine is approved. There appears to be a misconception that once a medicine is approved by the FDA, the work is done. In fact, many important lifesaving advancements have come from further research after a medicine is initially approved. Whether the research determines a medicine is also effective for different stages of a disease or a different condition altogether, the result of additional post-approval research is more patients can benefit from treatment. Despite this, the latest drug pricing plan targets medicines that have only been on the market for 7 years (small molecule medicine) or 11 years (biologics) – regardless of any additional indications the medicine has been approved for by the FDA. This guts any incentive for researchers to continue their critical work after a medicine is first approved.

Discourage development of generic and biosimilar medicines, which is key to driving competition in the United States. Congress created a carefully balanced system through Hatch-Waxman and the Biologics Price Competition and Innovation Act that encourages competition in the marketplace between brand medicines (both small molecules and biologics), generics and biosimilars. This system works to lower costs for patients and generates significant savings for the broader health care system while making room for additional critically needed innovation. In fact, more than 90% of all drugs dispensed at pharmacies in the United States are lower-cost generics, a number that exceeds other developed countries. But, under the latest drug pricing plan, medicines will be chosen for government price setting, in some cases, before a generic or biosimilar can even come to market. This would erode any incentive for manufacturers to invest in generic and biosimilar development.

Rely on government price setting, which has a history of causing restricted and delayed access to new medicines. Many countries in Europe implemented government price-setting mechanisms decades ago and patient access to medicines and investment in drug development have suffered. History shows that a government cannot interfere to dictate the price of medicines without negative consequences for patients. Adoption of government price setting and other anti-innovation policies across Europe in the 1980s and 1990s pushed R&D investment away from the continent to countries like the United States with more pro-innovation policies. That is why nearly 90% of new medicines launched globally since 2011 are available in the United States, compared to less than half, on average, in countries that allow the government to set prices.

Fail to meaningfully address the challenges patients have affording their medicines and instead makes a broken system worse. Today, many patients face high out-of-pocket costs and insurance barriers that restrict access to their medicines. That is not ok. But it is a problem that can and should be fixed. Unfortunately, the latest drug pricing plan is a missed opportunity to address the role middlemen, like pharmacy benefit managers, insurers and hospitals, play in forcing patients to pay more than they should for their medicine. Making sure patients share directly in the savings our industry provides, addressing insurance practices that restrict access to care and strengthening safety-net programs to ensure they deliver the support vulnerable patients need – these are real solutions that Congress should instead pursue.

Especially alarming is that neither chamber of Congress held hearings to debate and discuss the latest version of the drug pricing provisions included in the BBBA. Considering the significant negative consequences this plan poses to patients and our innovation ecosystem, it is irresponsible to move forward with it.

With the new year, Congress should take the opportunity to reconsider whether policies that threaten access to future treatments and cures are the right approach.

Tell Congress to protect Medicare and focus on commonsense solutions that will help people access and afford their medicines.

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