Medicare drug price negotiations could hurt patients by disincentivizing research

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A federal plan to negotiate drug prices for Medicare that aims to benefit patients, instead will hurt them by stifling scientific development, according to pharmaceutical companies and the U.S. Chamber of Commerce.

On Feb. 1, the U.S. Centers for Medicare & Medicaid Services (CMS) announced it would send initial offers to drug manufacturers on the first 10 drugs selected for negotiations to bring down prescription prices.

But the government bureaucrats won’t release details about how they determined the offered prices. That obscures the process of bargaining over 10 innovative medicines and does not benefit the drug companies or consumers, according to the Pharmaceutical Research and Manufacturers of America (PhRMA).

“This continues to be an exercise to win political points on the campaign trail rather than do what’s in the best interest of patients,” PhRMA Senior Vice President of Public Affairs Alex Schriver said in a statement.
“Government bureaucrats are operating behind closed doors to set medicine prices without disclosing for months how they arrived at the price or how much patient and provider input was used,” Schriver said. “This lack of transparency and unchecked authority will have lasting consequences for patients long after this administration is gone.”

The makers of the 10 drugs have agreed to participate in the talks, according to HHS. They also have filed various legal challenges to the plan, including one Delaware court case that held oral arguments this week, according to The Hill.

Negotiations will end Aug. 1, and prices won’t take effect until 2026, so it was unclear what other lawsuits might be filed before then.

Fewer drugs available?

Court fights aren’t the only result of the government’s plan. Patients will see new developments dry up as drug companies delay or stop research, said a statement by the U.S. Chamber of Commerce.

"You can’t call it a negotiation when the federal government has the ability to force you to accept their price or face an excise tax that can total 1,900% of all your sales,” Neil Bradley, Chamber executive vice president and chief policy officer said in a statement. “But the real costs will be paid by American patients.”

Bradley pointed to a Chamber report, “How American Patients Will Bear the Cost of Government Price Controls,” and other reports.

Supporters of negotiation compare drug prices in the United States with those in other developed countries in the Organisation for Economic Cooperation and Development (OECD). It’s also possible to compare levels of clinical research – which will drop if the United States imposes harsh tough market rules, according to the Chamber.

“Altogether, the United States is on a trajectory similar to other OECD economics where the introduction of biopharmaceutical price controls and other cost and expenditure containment measures expand and evolve over time into more draconian and comprehensive policies,” said another Chamber report. “These policies cripple the free market and enterprise and, as this report demonstrates, cripple life-saving innovation.”

By how much? From a 12.25% reduction in clinical trials for heart disease medicines to a 75% drop for early phase research for obesity, according to the Chamber report, “From Innovation Oasis to Research Desert: How Price Controls Imperil American Medical Innovation and the Search for Cures.”

Bradley the newest data projects upwards of 44% fewer new medical product launches in the United States due to the government’s price control scheme.

“That is why the U.S. Chamber has sued the Department of Health and Human Services to safeguard American patients and protect the development of lifesaving breakthroughs that could one day benefit us all," he said.