Two weeks after the pharmaceutical industry predicted dire consequences for innovation if the prescription price reduction plan proposed by House Speaker Nancy Pelosi passes, the White House is now echoing those concerns but suggesting even worse outcomes than industry analysts predict.
Two weeks after the pharmaceutical industry predicted dire consequences for innovation if the prescription price reduction plan proposed by House Speaker Nancy Pelosi passes, the White House is now echoing those concerns but suggesting even worse outcomes than industry analysts predict.
In a blog post, the White House said the plan put forward by the Democratic leader of the House of Representatives will hamper innovation. Citing the Executive Branch’s Council of Economic Advisers, the White House said the Pelosi plan could lead to a loss of 100 drugs entering the U.S. market over the next decade, or about one-third of the total number of drugs expected to enter the market during that time. Furthermore, the White House said the CEA estimates that the loss of those drugs would reduce Americans’ average life expectancy by about four months.
Additionally, the White House said the loss of those 100 drugs and the “resulting worse health outcomes” could have a $1 trillion economic impact over the next 10 years, which is “far larger” than the projected savings of the Pelosi plan.
The House plan, unveiled in September, calls for the government to use the International Pricing Index to bring the prices of drugs covered by government programs in line with those prices paid by other countries. Additionally, the plan places stiff penalties on the companies of up to 65% of the gross sales of the drug in question. That penalty will increase by 10% each quarter that the company fails to comply with the agreement. In its posting, the White House said the excise tax would not be deductible, which means that manufacturers would lose money from the sales of the drug. Furthermore, the White House said manufacturers would either have to accept the price for a given drug or decline to sell it in the United States.
In some ways, the Speaker’s plan is similar to drug price-reducing plans announced by the White House, including the “favored nations clause” and a 2018 price-negotiation plan for Medicare-supported infused and injected drugs that the administration claimed could save $17 billion over five years. In its posting, the White House said the Pelosi plan “may share the Trump Administration’s first goal of lowering prices, but the threat it poses to continued medical innovation will harm American patients in ways that far outweigh any benefits.”
The pharmaceutical industry has also warned of negative impacts to innovation should Pelosi’s plan become law, however its warnings are not as dire. Last month an analysis conducted at the behest of the Pharmaceutical Research and Manufacturers of America (PhRMA), the Biotechnology Innovation Organization (BIO) and the Council of State Bioscience Associations showed that the Speaker’s plan would result in at least 56 fewer new medicines for patients over the next 10 years.
Earlier this year, the U.S. Chamber of Commerce released its own study that predicted tying price controls to an international pricing index could limit options for many patients, including cancer patients.
The Congressional Budget Office, which scores legislation, also predicted a reduction in the number of new medications, but its prediction was far lower. The CBO estimated a loss of eight to 15 new drugs entering the U.S. market, but projected $345 billion in savings, CNBC said.
There is a competing bill in the Senate that has been backed by the Trump administration, but it may lack support from Republicans, CNBC noted. The White House is hoping to see some kind of price-reduction legislation passed prior to the 2020 election but with the pall of a potential impeachment hanging over everything, it is unknown whether or not anything will get done.
