Citing rapidly climbing drug prices and growing complaints from constituents about how they cannot afford their prescription drugs, Congressional Democrats are seriously considering legislation that, if passed, would upend the biotech innovation system that has made the U.S. the world leader in developing and delivering groundbreaking new cures and therapies to patients. The bill, known as H.R. 3, the “Lower Drug Costs Now Act,” contains a variety of provisions that its proponents believe will lower drug costs for patients. Yet, we know from numerous studies that the bill will have the unintended consequence of stopping drug development for the hardest to treat diseases while causing hundreds of thousands of job losses in the biotech sector nationally.
The core of H.R. 3 – and its most problematic proposal – is a policy referred to as “international reference pricing.” This proposal would remove market-based price negotiations and replace them with a system where the government caps the price of a drug to a level at or below 120 percent of the average price of that same drug across six countries including Australia, Canada, the U.K., France, Germany, and Japan.
Proponents of this idea argue that Americans should not be paying more than other countries for the same drugs. Yet, we know that lifesaving drugs become available to patients abroad at much slower rates, and sometimes not at all, because of the extremely restrictive price negotiation systems in those countries.
Furthermore, government price-setting like this would significantly reduce the incentive needed for biopharma companies to pursue the riskiest science to address the most challenging unmet medical needs. Data shows that a growing percentage of newly developed drugs are coming from small and emerging biotech companies which are predominantly pre-revenue, non-commercial, and privately funded. If H.R. 3 passes and market incentives disappear, biotech investors will likely move to other industries and markets, leaving promising early-stage life science companies without the investments needed to deliver transformative treatments to patients.
A recent study conducted by Vital Transformation shows how this would play out. According to the study, if H.R. 3 had been in place over the last ten years, 90 percent of the new medicines developed by small companies would have never come to market. That is over 60 new therapies that treat lymphoma, lung cancer, breast cancer, diabetes, multiple sclerosis, psoriasis, and hypertension that patients would not have today. This analysis is consistent with the Congressional Budget Office’s (CBO) estimate that, because of H.R. 3, fewer new therapies would become available to the patients who need them the most.
In addition to the negative impact on patient health, the economic impact of H.R. 3 cannot be overlooked: passage of the bill could result in 200,000 fewer biopharmaceutical jobs nationwide and nearly 1 million job losses across the economy.
Ensuring patients have affordable access to all therapies must be the core of Congress’ policymaking process. Instead of upsetting the market-based system that has made the U.S. the world leader in the development of new medicines, Congress should pass policies that lower out-of-pocket costs for consumers at the pharmacy counter. And for those on Medicare who are often on a fixed income, Congress should look at policies that can distribute out-of-pocket expenses over the course of a year instead of in big payments upfront.
The United States has long been the global leader in biopharmaceutical research, development, and manufacturing. H.R. 3 would send investments in innovation elsewhere with little evidence of positive patient impact. Our patients have access to more new and novel treatments than any other country in the world. Now, we must work to protect both innovation and patient access to new, potentially lifesaving therapies.
This article originally appeared in the Summer issue of MassBio’s bi-annual magazine, the MassBio Insider