By Merrill Matthews
The Department of Health and Human Services has a new plan to cut drug spending. But it’s not a change for the better.
To lower spending in Medicare Part B — the component of Medicare that covers advanced, physician-administered medicines — the agency plans to tie U.S. drug prices to the artificially low prices paid in other countries.
This would harm patients. Price controls may save the government money in the short term, but they would slow the rate of medical progress.
In most developed countries, the government dictates the price of prescription drugs. Governments use this power to pinch pennies, often at the expense of providing access to the newest breakthrough medicines.
Creating just a single new medicine costs an average of $1.7 billion and can take more than a decade. And only a handful of drugs sell enough to cover their research and development costs — much less subsidize ongoing research into new medicines.
If the government decides drug prices, drug developers will have a harder time recouping those investments — making investment less appealing. Progress towards therapies for illnesses like Alzheimer’s and cancer would slow. New drug launches would become rare.
U.S. patients currently have better access to the newest drugs than any other country. Consider that 89 percent of 290 new drugs released between 2011 and 2018 were available in the United States at the time of their initial launch. By contrast, German patients had access to only 62 percent of these medicines.
Delayed access to new drugs is the unfortunate reality for too many people around the world. If we import their policies, we will import their diminished access to new drugs as well.
HHS’s reform puts the financial interests of the federal government before the well-being of actual patients.
Merrill Matthews is a resident scholar with the Institute for Policy Innovation in Dallas, Texas. Follow him on Twitter @MerrillMatthews.