Posted on 08/19/2019 10:38:14 AM PDT by Kaslin
President Trump recently promised that "America will never be a socialist country" -- at least not while he's in office.
But some members of his administration didn't get the memo. The Department of Health and Human Services still plans to impose socialist, European-style price controls on advanced drugs administered through Medicare.
The proposal would tie Medicare's drug reimbursement rates to the average prices paid by governments that impose price controls on medicines. HHS officials hope their scheme will reduce pharmaceutical spending here in America -- and force other developed nations to foot more of the bill for drug research and development.
Their plan, though well-intentioned, misses the mark. It rewards freeloaders rather than punishing them. And it would jeopardize Americans' access to state-of-the-art drugs.
Countries with socialized healthcare systems frequently impose price controls on innovative drugs. Governments flat-out refuse to cover medicines that cost more than an arbitrary limit. If manufacturers want to sell their drugs in those countries, they have to heavily discount them.
That forces drug companies to generate a disproportionate share of revenue from countries, like the United States, that have comparatively free markets in healthcare. America accounts for just 5 percent of the world's population and a quarter of the global economy -- but funds 44 percent of global pharmaceutical research and development.
The administration wants to even the playing field by overhauling Medicare Part B, which covers advanced drugs administered in hospitals and doctors' offices. These drugs cost 80 percent more in America than in other developed countries. HHS' plan would gradually ratchet down Medicare reimbursement rates so that the government would pay, at most, 26 percent more than the average developed nation price.
The administration hopes this plan will force other countries to pull their weight. But in reality, those governments won't budge. Copying those nations' socialist tactics will only make it harder for Americans to access new therapies.
Already, many of the newest drugs aren't available in developed countries that impose price controls. Only two-thirds of new drugs launched worldwide between 2011 and 2018 are available in the United Kingdom. Roughly half are available in France and Canada. By contrast, 88 percent of those new drugs are available in the United States -- including nearly 95 percent of new cancer medicines.
Americans gain access to the latest cancer drugs an average of two years sooner than patients in Germany, France, and the United Kingdom. For a patient with terminal cancer, those two years could mean the difference between life and death. Unsurprisingly, cancer death rates in the United States have been falling for 25 years.
Price controls would also subvert efforts to develop cures for deadly diseases.
Medical research is a risky business. It costs $2.6 billion, on average, to develop a single new drug. And close to 90 percent of experimental treatments fail to gain FDA approval. Only the potential of profit incentivizes investors to fund these long-shot projects.
Price controls make it difficult -- if not impossible -- for companies to recoup their upfront costs, let alone earn a profit. They thus kill the incentive to invest in cures. If HHS adopts these price caps, drug development will grind to a halt -- and patients will suffer.
Fortunately, the president can end foreign freeloading without harming patients. Negotiating better trade deals could stop foreign governments from effectively robbing American innovators.
For instance, it's completely unfair that Germans pay far lower prices than Americans for drugs invented in U.S. labs. Perhaps a special negotiator with the U.S. Trade Representative -- one who focuses solely on medicines -- should threaten tariffs on every Mercedes, BMW, and Volkswagen until the German government fairly values American medicines.
Fighting socialism with socialism will only harm patients. Let's hope President Trump nixes HHS's plan and finds a more effective way to hold foreign freeloaders accountable.
I stridently disagree.
Refusing to provide drug companies with blank checks from the taxpayer is merely common sense.
They can still charge more if they want to. They just won’t get it from our taxes. It isn’t socialism.
Read the first half. Strikes me as weak arguments.
What is the alternative way of getting these drug prices closer to world prices instead of exorbitant captive market rates?
The solution to unfair pricing is to change the expiration by date system. The FDA set the expiration at a tested date when the efficacy of the drug has decreased by 1%. This means that it’s still 99% effective, but available for sale outside the country at a large discount rate. Why are we giving this discount to foreigners? The FDA needs to revise the expiration criteria to 10% not 1%. meds will last substantially longer and will be cheaper.
I too agree with you.
We have too many taxpayer paid blank checks out. Drugs, school, higher education, military, force account contracts, social services even roads and bridges even though they are bid there are not enough rogue bidders.
Using your overwhelming buying power to negotiate better prices (and saving taxpayers money to boot), is not ‘socialism’ by any accurate measure - in fact, it’s down right capitalist, and about time.
The author misses a huge point and looks very foolish as a result. If socialism is the problem, then don’t bother complaining about the negotiating tactics of HHS. Instead, the author should be pushing for the elimination of Medicare in its entirety.
Why do you include the military? Military personnel pay their fair share and up to the point of death and life changing injuries. Besides, if there is one righteous tax that should be paid, it is for the “common defense”. Everything else I agree with.
If you buy your drugs in Canada or Mexico, you just might to investigate where and how those drugs were made. Packaging may be nice, the contents not so good.
“For instance, it’s completely unfair that Germans pay far lower prices than Americans for drugs invented in U.S. labs.”
No one is forcing drug companies to sell the drugs to the German government.
“What is the alternative way of getting these drug prices closer to world prices instead of exorbitant captive market rates?”
Let other countries bid in the US market. If a German company makes the same pill as an American company and it is cheaper, why can’t I buy my pill from them? It’s all about competition.
There are few industries that need RICO prosecutions as badly as the US pharmaceutical firms.
The author is not missing a point. He is pushing a meme from the pharma industry that he was almost certainly paid to do.
That is that any move to scale back on the public money gravy train enjoyed by certain industries needs to be denounced as “socialism”.
Keep it up and eventually they’ll get the real thing.
Military contracts and spending. Tell me it isn’t filled with waste and predatory pricing.
They would have to get by the FDA first. The competition is only US based and sometimes protected by patents. The whole US market is protected from outside competition.
I could buy the very same diclofenac sodium aka voltaren outside the US for about 10 bucks a tube or even less. It is just topical ibuprofen. In the US it is more than 50 to 80 bucks. Same gel, made in Germany. But it is against the law to mail order it from outside the US where it is a simple over the counter topical anti-inflammatory gel. The pricing is predatory.
I used to buy cipro and just about anything else other than narcotics over the counter from the druggist in Brazil. Same stuff sold here from the same manufacturer but at a fraction of the price.
Sounds like it is along the same line as condemning anything one finds offensive as “racist” or “white supremacy”.
Just call anything that does not allow someone to hold people hostage for something everyone needs or any criticism of a monopoly as “socialism”. I consider taxes in general to be socialism since they take from those who can to give to those who won’t or can’t.
Abolishing the patent laws for drugs would be better than socialism or price controls.
Because you are not just paying for the pill. You are also paying for the R& D that invented and tested the drug as well as the manufacturing. If the former isn’t paid there wont be any new drugs. Do you expect drug companies to invest a billion dollars formulating and testing a new drug then give the recipe away for free?
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