Democrats choose less risky path on drug prices

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Venture capital firms that invest in biotechnology no longer necessarily have to. Their money could just as easily go into other profitable areas of the economy, like technology. Early stage drug companies are funded in part because high drug prices in the United States mean that a blockbuster drug will be worth a huge jackpot. As the rest of the world pays less, almost all of this investment goes to the US market.

The House’s original proposal to regulate drug prices would have allowed the government to lower the price of 250 expensive drugs, no matter how new or innovative they were. The new approach limits this power: drugs would only be subject to price regulation after they have been on the market for about a decade. This would mean that drug companies could still charge huge prices for new drugs, but they could only do so for a while. The law would allow price regulation after nine years for most common drugs and 13 years for more complicated drugs called biologics.

Peter Bach, Director of the Drug Pricing Lab at Memorial Sloan Kettering and Chief Medical Officer of Delfi Diagnostics, has long been a strong advocate of drug pricing reforms. He said a deferred approach would protect the public and government from what he sees as the industry’s most egregious practices – the endless price hikes and patent shenanigans that often isolate expensive drugs from the market. compete for decades. But he also says he will keep the promises of the country’s intellectual property system by giving companies a few years to profit from their new inventions.

“Everything aligns with the basic premises of our system,” he said. “And master the distortions that have crept in.”

The original legislation was almost guaranteed to discourage the creation of certain future drugs. The non-partisan Congressional Budget Office said it would lead to a 3% reduction in drugs in the first decade of life and 10% less in the next decade as it would affect drugs earlier in life. the pipeline. Other system experts, including Garthwaite, say the effects could be even greater.

Stephen Ubl, CEO of industrial trade group PhRMA, had called the threat of the original bill “existential” to his industry. He did not appear less worried in a statement this week about the new proposal: “If passed, it will upset the same innovative ecosystem that has brought us life-saving vaccines and therapies to fight Covid-19.” “

Ubl’s comments ignore how the new proposal is more favorable to his industry than its predecessor.

The industry message “is not diminishing, although in fact the changes in incentives for innovation would be less,” said Rachel Sachs, professor of law at Washington University in St. Louis, who studying drug policy. She said the delay in negotiations was likely to mean less damage to early-stage development, and noted that many of Medicare’s more expensive drugs have been on the market for years, meaning such negotiations could still make the difference.


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