Congress Must Support Innovation, Not Pick Winners and Losers
By Michael Hodin
We seem to fully understand the importance of fostering innovation when it comes to certain sectors. Look no further than semiconductor chips, where Congress is about to pass a bill that gives more than $50 billion worth of subsidies, and electric vehicles, where we fall over ourselves to pledge obeisance in money and rhetoric. How peculiar then is it that we take nearly the opposite view when it comes to innovation in the biopharmaceutical sector. From the current stance of Majority Leader Schumer to the previous verbal commitments made by our President, their insistence on advancing drug price controls for Medicare is sending confusing signals to patients, caregivers, and investors on the importance of medical innovation. Confoundingly, it is our Medicare population, the fastest growing segment of patients, that is most dependent on innovation to address diseases from HIV and cancer to osteoporosis and Alzheimer’s.
For decades, America has been a leader in the development of lifesaving cures, and the life sciences industry is at the heart of this country’s innovation economy. Positive returns on investment in related industries have inspired a new wave of private sector investments, specifically into making healthcare more accessible and creating robust research and development operations.
But biomedical investments are costly and risky: only 12 percent of drugs entering clinical trials are approved for use by the FDA. Federal protections on new medicines for patients have been a critical policy approach, providing a “life boat” that enables companies to pursue risky bets on the promise of new treatments. This ensures that companies will recoup their initial investment on those treatments that do succeed and has resulted in pivotal breakthroughs, from COVID-19 vaccines and therapeutics, to precision medicine that has transformed outcomes in several hard-to-treat cancers.
It is difficult to comprehend, then, why Congress is choosing to slow down progress for innovation in the health sector in the same week that they are providing the semiconductor industry with $54 billion in direct subsidies and $24 billion in tax incentives to spur development.
At the heart, these proposals do not adequately address real concerns regarding transparency in the healthcare supply chain while disincentivizing future research. This new policy environment will discourage private sector investment in multiple areas moving forward. A new analysis from the University of Chicago illustrates how proposed drug price controls would impact cancer alone, reducing overall annual cancer R&D spending by about $18 billion per year, or 31.9 percent.
Drug price controls being advanced in the Senate also fail to address the real factors exacerbating health-related inequities, such as a lack of access to treatments and cures — the gap in equity, which, ironically can be best filled by innovation. Drug price control proposals threaten the innovation and progress of America’s life sciences companies as they seek to develop treatments and cures of tomorrow.
President Biden revitalized the Cancer Moonshot initiative and demonstrated a steadfast commitment to the war on cancer. However, the President’s worthwhile efforts to encourage the development of new cancer treatments are in direct conflict with his support of the recently introduced drug price control policies. The same University of Chicago analysis found that cancer patients would miss out on 135 new drugs being developed from 2021–2039 due to the implementation of price controls. The net result would be a reduction in the number of new cancer treatments, despite the commitment of this administration.
This research builds on evidence that has emerged on just how many medications would be impacted by drug price controls across a variety of the most devastating diseases and conditions patients face today. A recent Avalere Health study found that more than 120 drugs could be eligible for Medicare price negotiation by 2030, which the authors also found would decrease incentives for innovation and therefore access to drugs in the near future.
Efforts to prevent and treat COVID-19, from vaccines to diagnostics and therapeutics, are themselves a testament to the power of American medical innovation. Even as we bend to support more ephemeral goals of sustainability and climate change, we cannot ignore the realities of age demographic transformation and the burdens this will place on our healthcare system. The evidence is clear — implementing drug price controls hinder our ability to meet this challenge. The President and Congress should build a more inclusive health innovation environment focused on policies similar to those encouraging progress in semiconductor chips and electric vehicles. Now is the time for Capitol Hill to double down on biomedical innovation to provide the very best, healthiest future for all Americans.
