The Perils of Drug Price Controls
House Budget Committee Chairman Jodey C. Arrington (R-TX) and the House Budget Committee’s Health Care Task Force (HCTF) Chair Michael C. Burgess M.D. (R-TX) have long cautioned against expanding the so-called Inflation Reduction Act (IRA) Medicare drug price controls before understanding the true impact of these policies on patient access to new cures and therapies.
Responding to the House Budget Committee HCTF’s work, the Congressional Budget Office (CBO) published a blog post requesting feedback to help inform improvements to its drug development model and related analysis.
A recent opinion piece in BioSpace by American Enterprise Institute Nonresident Fellow Kristen Axelsen and University of Washington School of Pharmacy Professor Louis Garrison similarly caution against these controls, and highlighted the ongoing work of CBO to update their modeling of the impact of drug pricing policies on innovation.
Word on the Street:
Via BioSpace:
- “But other estimates differ substantially from the CBO’s projection of how many fewer drugs would be developed as a result—up to 135 fewer new drugs by 2039—and this loss of new therapeutics is expected to have a far larger negative impact on health than the entire COVID pandemic.”
- “How did CBO analysts arrive at those figures? With market-altering legislation on the line, including President Joe Biden’s call to more than double the number of drugs subject to price negotiation, we need to take a closer look at how we forecast the outcome.”
- “We need to do a proper job of investigating how investors are reacting, and policymakers should be acknowledging the uncertainty around the potential impact on drug development before expanding the policy. The investment of billions of dollars in developing medicines—and the curative and health benefits they provide—is at stake.”
- “The CBO has, for good reason, recently called for more evidence on the implications of policies such as the IRA that could change the expected market size on drug development as it looks to inform future estimates—for example, if Biden’s call to expand the IRA makes it into proposed legislation.”
- “Medicines and vaccines can save lives, reduce human suffering and contribute to economic productivity and U.S. health security. There is too much at stake to not seek better evidence to inform future policy on biopharma regulation.”
The Bottom Line:
As spending on federal health care programs continue to be the primary driver of our nation’s $34 trillion and counting in national debt, policymakers need to closely examine the sweeping effects of policies that could inhibit innovative cures and therapies from reaching patients and significantly reduce health care costs.
As recognized by CBO last year, medical innovation, including new medicines, holds the power to significantly reduce federal health care spending by curing and treating chronic disease.
Policymakers need to fully understand the tradeoffs associated with proposed policies that could stifle medical innovation along with the corresponding direct impact on the federal budget, and, more importantly, American patients and families.
Unfortunately, President Biden’s Budget doubles down on the IRA Medicare drug price controls at a time when the impact of the policy is not fully understood and is being revisited by CBO.
CBO’s willingness to revisit their analysis of the IRA’s impact on new drug development was at the request of is the Budget Health Care Task Force:
- On October 26th, 2023: HCTF Chair Burgess led a roundtable discussion, which brought together CBO Director Swagel, independent experts, and stakeholders to examine CBO’s analysis of the IRA’s impact on new drug development in the United States. You can view the release HERE.
- On November 20th, 2023: Chairman Arrington, HCTF Chair Burgess, and HCTF Members led a letter to CBO Director Swagel that requests answers to how CBO analyzed the impact of the IRA’s drug price control provisions on patient access to the new drugs in the United States. The letter also directly called upon CBO to issue a request for new information on how policies impact new drug development. You can view the release HERE.
- On December 20th, 2023: CBO issued a blog post titled “A Call for New Research in the Area of New Drug Development,” allowing independent researchers and stakeholders to formally submit new data and research regarding policies that impact patient access to new medicines. You can view the release HERE.
- On December 21st, 2023: CBO responded to the HCTF letter requesting more information on how the agency approaches analysis of policies that impact new drug development in the U.S. You can view CBO’s response HERE.
The Budget Committee HCTF, led by Chairman Burgess continues engaging CBO to ensure accurate and comprehensive analysis of policies that impact patient access to new medicines.
