Government price fixing for U.S. medicines will cost lives, jobs, innovation
Legislation that fixes prices for prescription medicines would limit patients’ access to new treatments while doing nothing to lower prices at the pharmacy counter, according to a new analysis released by NCBIO, the NC Biosciences Organization. The proposed law would also have a devastating effect on North Carolina’s innovative life sciences economy.
The study was commissioned by the Council for State Biosciences Organization and conducted by Vital Transformation, an international health economics firm. It examined the effect of “foreign reference pricing,” the practice of tying the price of medicine in the U.S. to the price paid in a select group of other countries where prices are kept artificially low. This kind of government price setting is being proposed in H.R. 3, the Lower Drug Costs Now Act of 2019, a bill currently being considered in Congress.
To predict the effects of H.R. 3, the researchers modeled the consequences of having the law go into effect 10 years ago affecting 125 medicines. The news is not good.
- Nationally, the number of new medicines developed by small and emerging biotechs would have dropped by 90% or more, from 68 approved medicines to 7 or fewer, due to lack of investment capital.
- In North Carolina, more than 10,500 jobs paying an average of more than $95,000 would never have been created, along with almost 50,000 jobs supported by the industry. North Carolina’s pharmaceutical industry is the third largest in the nation by people employed.
- $17.5 billion in economic output would disappear from North Carolina’s economy over the decade.
- Pharmaceutical affect by H.R. 3 invested nearly $487 billion into 215 venture partnerships from 2009 to 2019. H.R. 3 would reduce cash available for investment in innovation by 46% at a minimum.
- The study found that on average $5.2 billion is spent to a give a potential new medicine a 50% chance of gaining approval by the Food & Drug Administration. A “sure thing” costs more than $20 billion to develop.
- H.R. 3 would “penalize” companies that focused on oncology, neurology, pulmonology and rheumatology treatments commonly needed by Medicare patients.
“The supporters of H.R. 3 seem to believe that investment in new medicines will continue even after much of the incentive for doing so has been removed,” said Laura Gunter, executive vice president of NCBIO. “Investment resources will go elsewhere, and patients, particularly those with less common conditions, will lose out on new life-saving medicines and treatments.”