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.
Drug patents aren’t the main problem.
Some form of patent protection to protect drug R&D investment is necessary.
It’s government forcing insurers to buy drugs regardless of price that is a problem.
From my first health insurance reform plan, which is free to copy:
SEC. ???? PLAN OFFER/DRUG MAKER ACCEPTANCE PLANS.
(a) A plan offer/drug maker acceptance plan must[to get a federal tax credit] be built by the following process, or a substantially equivalent process:
(1) The plan sponsor must decide on a drug-only plan drug_age_factor dollar multiplier between $5 and $9.
[If a dollar multiplier of $8 is chosen, a 64-year old would have a drug-only premium of $168.80/month (i.e. $8*21.1/month).]
(2) The plan sponsor must then draw up a proposed list of drugs and their apparent drug makers and list the percentage of premiums that will go to the makers of the drugs for an “all-the-doctors-prescribe” supply with the recommended drug co-pay above, or a drug plan set lower co-pay amount.
(3) The initial acceptance period must be open for at least 14 days.
(4) If accepted by the drug makers, the drugs will be locked into the plan formulary for the entire term of the plan (and its policies).
(5) The plan sponsor must then draw up another list of drugs and their apparent drug makers and list the percentage of premiums that will go to the maker each drug for an “all-the-doctors-prescribe” supply with the recommended drug co-pay above, or a drug plan set lower co-pay amount.
(6) The subsequent round acceptance period must be open for at least 14 days.
(7) If accepted, the subsequent round drugs will be locked into the plan formulary for the entire term of the plan (and its policies).
(8) Steps 5 through 7 may be repeated as often as desired by the plan sponsor, as may be possible.
(9) The premium amounts would be reduced by the total percentage unallocated and the participating drug maker percentages raised to equal 100%.
[If a dollar multiplier of $8 was chosen and 4% of possible premiums remained unallocated, a 64-year old would have a drug-only premium of $162.05/month.]
(b) Plan sponsors may set percentages to be split between two or more drugs based on their prescription volume (and other plan sponsor rules), subject to acceptance by more than one drug maker.
(c) reserved.
(d) No federal premium tax credit shall be issued for a person’s plan offer/drug maker acceptance plan unless, in a manner the Secretary of HHS shall specify,
(1) the plan was purchased by a care plan on the person’s behalf, or
(2) the person’s doctor/physician assistant/nurse practitioner or a registered nurse employed by the person’s state approved enrollment.
[Coverage under a plan offer/drug maker acceptance plan might be far less than of a Medicare Part D type plan.]
(e) Drug plans may offer locked-in access to [Part B cancer] drugs with percentage discounts earned by monthly premium payment off Federal Drug Marketplace level pricing, at the patient’s lowest contracted drug supplier-set multiplier, good for eight years from the start of the premium month.
(f) Discounted potential purchase rights to drugs in FDA trials may be included in monthly percentage discount programs, using up to 10% of the plan premiums.
[This is to allow drug developers to get income for a drug in development and for plan buyers to buy potential discounts for drugs in development.]
[If a plan buyer bought 24 months of 2% discounts and 12 months of 1.5% discounts, a $4,000/year Federal Drug Marketplace level priced drug would only cost the plan buyer $1,360/year upon FDA approval.]
(g) Drug makers and drug developers shall track all their monthly percentage discounts for each covered person [using taxpayer ID, name, address, date of birth information] associated with such policies.
[For example: If you had sixty premium months of 1% discounts and your drug would normally cost you $14/day, you would pay $5.60/day for the drug.]
(h) Plan sponsors to pay for drugs and drug discounts within 60 days of premium receipt or as otherwise agreed to.
(i) To be federal premium tax credit eligible, drug-only drug maker acceptance plans costing at least $5.40 times the person’s drug_age_factor must include some drugs of each of the following types:
FDA-designated breakthrough, orphan, recombinant and anti-neoplastic adding at least 60 days of life expectancy against at least one type of cancer.
(j) For plan offer/drug maker acceptance plans to be federal premium tax credit eligible, their co-pays must be less than:
(1) 50% of Federal Drug Marketplace levels on those drugs for FCC Lifeline eligible persons on such plans costing at least $5.40 times their drug_age_factor
(2) 40% of Federal Drug Marketplace levels on those drugs for FICA&SE tax price/FCC Lifeline eligible persons on such plans costing at least $6.30 times their drug_age_factor
(3) 30% of Federal Drug Marketplace levels on those drugs for FICA&SE tax price-covered persons on such plans costing at least $7.20 times their drug_age_factor
(4) 20% of Federal Drug Marketplace levels on those drugs for FICA&SE tax price-covered persons on such plans costing at least $8.10 times their drug_age_factor
(5) 50% of Federal Drug Marketplace levels on those drugs for income tax price-covered persons on such plans costing at least $8.10 times their drug_age_factor
[That’s to help lower-income people and to encourage people to buy more expensive plans with better coverage.]
[Since $5 multiplier plans may be independently built, the two provisions above can’t cause total drug plan tax credit lockout.]
This is a wedge issue to scare people against Trump. AARP has ads every hour pushing the “discussion”.
This is from my first market-force health coverage reform plan and is free to copy:
SEC. ???? FEDERAL DRUG MARKETPLACE.
[The Federal Drug Marketplace would be run by HHS with FDA help.]
[Drugs on offer via the Federal Drug Marketplace would be generally affordable to consumers and makers of premium drugs would get paid pretty much what the “market” buyers could afford to pay.]
[The Federal Drug Marketplace would be
[an exchange website menu financial payment calculator using postal service and federal tax system data, and
[provide a 6-digit alphanumeric code to registered exchange users, and
[provide federal tax system data for the registered exchange user to an exchange registered
[drug maker patient assistant program website that provided patient data and the code to the exchange website.
[The actual discounts would be provided voluntarily by drug maker participants.]
[Payment would be taken at drug maker websites or at dispensing pharmacies.]
[Depending on individual drug maker policy, drugs would be
[be sent to your doctor, or
[picked up at a pharmacy after showing your prescription and payment page (and that page has been confirmed by the pharmacist), or
[paid for and picked up at a pharmacy using your prescription and a special discount code.
(a) Any drug that is currently FDA-approved for sale to US patients may be listed on the Federal Drug Marketplace as the Secretary of HHS shall specify by
(1) the drug maker, or
(2) other entity that has national commercial volume US sales rights to the drug.
(b) Any implantable device that is currently FDA-approved for sale to US patients may be listed on the Federal Drug Marketplace as the Secretary of HHS shall specify by
(1) the implantable device maker, or
(2) other entity that has national commercial volume US sales rights to the implantable device.
(c) Listing would be until
(1) the start of the second calendar year after listing, or
(2) removal of FDA US marketing authorization for the product.
(d) Any Federal Drug Marketplace vendor may insist on
(1) a $20 per order minimum,
(2) delivery to a doctor or hospital in the US.
(e) A drug shall be considered a Class E [expensive] drug if it is
(1) an FDA-designated breakthrough drug,
(2) an FDA-designated “orphan” drug,
(3) a recombinant drug, or
(4) an anti-neoplastic drug adding at least 60 days of life expectancy for the average patient against an FDA-approved indicated type of cancer.
(f) A Class E drug may be offered on the Federal Drug Marketplace with a patient daily treatment cost of $2, plus one of the following:
(1) $0, if the patient is an FCC Lifeline eligible household member [total $2/day -> $720/year], or
(2) the higher of
(A) (a lister-set multiple less than 1)*(the patient’s latest IRS processed federal income tax 1040/1040A/1040EZ return “Tax”)/(100*(number of filers)), if such a return exists,
(B) (a lister-set multiple less than 1)*(2*FICA + self-employment tax payments going back three years)/1,000,
(C) $8, if the patient lives in a house, or
(D) $6, if the patient lives in another type of housing.
(g) reserved.
(h) A house shall be considered to be a detached dwelling or an attached housing unit with no housing unit above or below.
(i) The system shall assume that any zip+4 address with a unique numeric part of a street address is a house.
[Mr. & Mrs. Big Bucks: $10,000 annual federal income tax, multiplier=.8, two filers~ = $52/day of treatment activity -> ~$18,980/year]
[Mr. Joe Six-Pack: $30,000/year income, multiplier=.8, ~$14,000 3-year total 2*FICA&SE tax ~= $16/day of treatment activity -> ~$4,000/year]
[Mr. Robert Retired Houseowner: total $10/day -> $3,650/year]
[Bob Burgerflipper: total $8/day -> $2,920/year]
[Remember, that might be $2,920/year for a drug an employer might now pay $10,000/year for.]
[If an apartment dweller flips burgers for $17,000/year pre-tax, that $2,920/year may seem steep.]
[A patient quoted $18,980/year might pay $10,000/year locally or fly off to Canada or Europe.]
[Yes, market-like pricing can be unpleasant, but market pricing actually is the natural order of things without government meddling.]
[Limiting the number of drugs that may be sold at high pricing via a federal government portal is meant to prevent ignorant consumers from overpaying for drugs.]
[As you well know, there are lots of really stupid people in the USA.]
[People can still go to a corner drug store and overpay for drugs.]
(j) A drug product that does not contain treatment levels of a Class E drug may only be listed for sale
on the Federal Drug Marketplace at a price per day of treatment level activity of no more than
(1) a lister-set multiple less than 5, times
(2) a drug complexity price factor that is the sum of
(A) $1, plus,
(B) 30 cents per molecular ring in any key drug, up to 4 total per USP class, plus,
(C) 10 cents for each known atom in a drug molecule other than of carbon or hydrogen, up to 10 total per USP class, times
(3)
(A) .2, if the patient is an FCC Lifeline eligible household member, or
(B) the higher of
(I) 1,
(II) the patient’s tax return AGI from the penultimate calendar tax year divided by the multiple of $30,000 and the number of filers of that tax return.
(k) An FDA-approved implantable medical device may only be listed for sale
on the Federal Drug Marketplace at a patient cost of no more than
(1) a lister-set multiple not more than
(A) 10 for any electronic-driven/motorized device, or
(B) 2 for any other device, times
(2)
(A) $200, if the patient is an FCC Lifeline eligible household member, or
(B) $2,000, if the patient lives in a house, or
(C) $1,200, if the patient lives in another type of housing.
(l) For FDA-approved implantable medical devices, insulin and other recombinant drugs, the federal government shall pay a 100% match on ‘FCC Lifeline eligible’ household member price purchases, paid in full by patients, their relatives, insurers and domestic governmental entities, upon claims submitted as the Secretary of HHS shall specify.
No sympathy for pharma here. The SOBs have been raising prices this year like there was no tomorrow. I’m not talking about fancy cancer drugs but the generics that have been around forever. You can get better pricing from WalMart than by going through a Part D supplemental insurance company and they blame it all on the predatory practices of the drug manufacturers. A pox on all of ‘em.
“Do you expect drug companies to invest a billion dollars formulating and testing a new drug then give the recipe away for free?”
No. However, if I can get the same drug for 10% of the sticker price from a global competitor, why can’t I?
They have that in foreign countries as well. But the difference is that they don’t give full patent protection like we do. They either don’t honor the patent at all or they regulate the prices. Regulated prices is a form of patent weakening. We should reduce the life of the patents and prohibit this practice they have of getting extensions. If it doesn’t generate enough r&d then the government will just need to subsidize it.
Was it not proven that the alleged health care plan from the previous administration was authored by the insurance and drug companies? And just like many wealth management funds and hedge funds buying up security companies so they can cash in on government contracts, the insurance and drug companies knew that Uncle Sam, the taxpayer, was being forced to pay the bill, no matter what. Prices of drugs, rather than coming down, increased because they knew that Uncle Sugar was paying the bills.
This topic, in one variation or another, has been on FR quite a bit. One commenter advised that the drug companies have figured a way to maintain control over their products, after the trademark has lapsed, through some type of licensing?? and that prevents cheaper generics to come to market.
Only thing that will lower prices is competition. Nothing more. Nothing else. I realize that the companies invest a lot and need to recover their investment. I get it. But rather than artificially lower prices through some sort of price controls or regulations, figure out a way to get generics out there to compete.
By the way, other than Kurt Schlicter, are there any writers on Townhall that support the President?
BTTT
That is what it is exactly. We are not stupid
I am a believer in separate nations and their sovereignty.
I could give a rip what some other country is selling a drug for. Nor do I think a US company should be making up their costs on the backs of US consumers who they have subsidizing foreign pharm sellers and users.
Should we sell a Mustang in the Congo for $500 bucks and in the US for $60,000, just so some other people can have one?
Strikes me as crazy. Develop and sell to our own country, and any other sales will be gravy.
BKMK
When a drug company can pay another drug company NOT to make a generic form of their pill (patent expired) THEN something is wrong with the system and it ain’t capitalism.
More BS from the money-grubbing, fascist Big Pharma.
I paid $5 for Clavamox anti-biotics 10 years ago for my animals. The cost is now $20 for the same dosage. ESAD, big pharma.
Really? How would that help?
What you're proposing would allow anyone to swoop in as soon as a drug was approved and make a copycat. Why would any company spend 10 years and billions of dollars to research and test a novel drug, if they couldn't make money on the effort?
Once again, the alleged "freedom-loving, small government" FReeper community shows how little they know about the pharmaceutical industry. You're all for small government, but you want government with an iron fist when it comes to pharmaceutical pricing. Hypocrites.
I agree with you but some of the drug companies bring this on themselves (like the epipen price hike). Mylan bought the rights to it and raised the price 1000%. All R&D already done. Easy manufacture. Just pure greed. This was a life saving device and this was price gouging. No way around it. No excuse for what they did. None.
Personally, I would like to see pressure being applied to other governments to pony up more. I also think that extending the patent life in exchange for lower prices might also be some incentive for pharmaceutical companies.
Price regulation means that the company cannot make anything of the patent, and presumably socialism would do the same. So abolishing the patent right would be a less sweeping policy than either price controls or socialism.
I'm not understanding your point...are you suggesting we should do away with patent rights altogether? If you did that, why would anyone spend the time and resources to invent or discover anything new?
I am suggesting that the patent rights should be weakened. But I ask you the parallel question: why would anyone invest in R&D if the price were regulated at a low level that did not include the cost of R&D? Why would they invest in R&D if socialism prevented them from keeping the profits? How would those things be better than abolishing the patent altogether?
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