Posts Tagged: "price controls"

It was little more than a month ago when the Biden Administration unleashed its draft guidelines for applying the march-in provisions of the Bayh-Dole Act. For more than 43 years, the law was implemented as written. Every Administration—including the Biden Administration—rejected repeated attempts to misuse the law so the government could license copiers when critics felt that a product based on a federally-funded invention was too expensive. This was mainly sought under the guise of lowering drug prices. Even though the Administration issued a stinging denial of the most recent attempt last March, in December it reversed course.

The U.S. Chamber of Commerce released a report today predicting that proposals by the Biden Administration to impose price controls on certain pharmaceuticals will reduce the number of clinical trials “by thousands across all categories of research examined and by up to 75% in some therapeutic areas,” eventually turning the United States into a “research desert.” The report comes on the heels of a Federal Register Notice last week that proposed a framework for expanding the use of march-in rights under the Bayh-Dole Act to circumstances in which qualifying drugs are priced too high.

Twenty-five intellectual property luminaries sent a letter today to several members of Congress asking them to beware of misleading and inaccurate assertions by “activists and academics” that government price controls on drugs will lead to lower costs for consumers. The letter was sent to Senators Bernie Sanders (I-VT) and Bill Cassidy (R-LA), Chairman and Ranking Member, respectively, of the Senate Committee on Health, Education, Labor & Pensions; and Representatives Jason Smith (R-MO) and Richard Neal (D-MA), Chairman and Ranking Member, respectively, of the House Committee on Ways and Means.

On August 28, officials from the U.S. Chamber of Commerce held a video call to discuss the trade organization’s legal action against the U.S. Department of Health & Human Services (HHS), including a motion for preliminary injunction filed against the HHS last week in U.S. district court. The U.S. Chamber officials noted that the legal uncertainty looming over the HHS’ implementation of drug price control mechanisms under the Inflation Reduction Act (IRA) will cast a significant pall over the Biden Administration’s celebration of the program one year on.

On June 9, the U.S. Chamber of Commerce and several affiliate organizations filed a lawsuit in the Southern District of Ohio raising a series of constitutional challenges to provisions of the Inflation Reduction Act (IRA). At issue in the lawsuit are several statutes granting the U.S. Department of Health & Human Services (HHS) the authority to set prices for Medicare drugs. The U.S. Chamber is challenging a lack of oversight for so-called “negotiation” procedures as well as an onerous excise tax on several grounds, including separation of powers and due process violations.

Today, the U.S. Chamber of Commerce’s Global Innovation Policy Center (GIPC) published a Patient Access Report profiling the many ways in which drug pricing controls, often enacted in the name of ensuring widespread access to low-cost medicines, actually result in less access to innovative medicines that are more widely available in free markets. The GIPC’s report comes at a time during which the Biden Administration has taken recent action on drug pricing provisions included in the Inflation Reduction Act passed into law last August, which could have deleterious effects on patient access in the United States.

Recently published research conducted by Vital Transformation shows legislative provisions similar to those found in the Inflation Reduction Act of 2022, which allows the U.S. Government to “negotiate” drug prices under a set framework based upon the amount of time a drug has spent on the market, would have significant, negative effects on patient access to new therapies because funding would be severely curtailed for research and development. According to Vital Transformation, the reduction of net earnings due to government price fixing would substantially reduce the amount of research and development of small biotech firms, which would negatively impact future drug discovery and development. The model used in the study estimates that with government price fixing “only 6 of 110 previously approved therapies would be considered ‘not at risk’ of being cancelled, or at very least divested.”

As Knowledge Ecology International and its allies await the decision of the National Institutes of Health (NIH) on their latest attempt to misuse the Bayh-Dole Act for the government to set prices on any product based on a federally funded invention, they’re growing more uneasy. And that’s understandable. If you’d bet the house on an ivory tower theory that’s been summarily rejected for the past 18 years every time it’s been trotted out, you’d be uneasy too. They know that if the Biden Administration rejects the pending petition to march in on the prostate cancer drug Xtandi because of its cost, this leaky vessel can’t be credibly refloated again.

The new Presidential Administration has hardly settled in before being confronted with a stark choice: will they continue policies that foster public/private sector R&D partnerships or be diverted down a path that’s been a dead-end? President Biden faces two herculean tasks: getting the COVID-19 pandemic under control while reviving the economy. The problems are intertwined and require continuous innovation to overcome, which means tapping the best minds in our public and private sectors. We’ve just witnessed a modern miracle, as such partnerships seamlessly came together to create effective COVID-19 vaccines and therapies in record time. But the policies these collaborations depend on are now being questioned.

To say that the world’s been deeply shaken by the coronavirus (and the disease it causes, known as COVID-19) is no exaggeration. Our stock market has plunged, world trade is disrupted and people around the globe are fearful about confronting a disease that’s erupted out of the blue. Eyes are turning to the United States of America for a solution. There’s a good reason for that: we are far and away the best at developing new therapies to combat the scourge of disease. In all likelihood, a vaccine for the coronarivus will come out of a partnership between our National Institutes of Health (NIH) and the private sector. We have tried and true mechanisms for facilitating these arrangements, which NIH has effectively employed in the past. Our political leaders are well advised to leave them alone. Adding more unpredictability at this stage of the game, such as imposing “reasonable pricing” provisions on a vaccine that doesn’t exist, only adds more uncertainty to the equation. And there’s plenty of that already.

In this age of polarization, it’s almost impossible to imagine Congress enacting bipartisan legislation that would benefit businesses, higher education, and consumers alike. But that is exactly what happened 40 years ago, and it is worth remembering. As has been outlined elsewhere on IPWatchdog in 1980, Democrat Senator Bayh and Republican Senator Dole wrote a bill that seemed simple, but changed the face of American innovation. Prior to the Bayh-Dole law, anyone who accepted government funding of their research had to give any resulting patent rights to the government. Superficially, that sounded fair – if taxpayer money paid for research, the taxpayer should get the benefits. But the reality was that no one benefitted. Few companies had any interest in investing the substantial resources necessary to transform an early invention into a product when the underlying patents were held and controlled exclusively by the government. And those inventions that were developed simply sat on the shelf in government offices with no plans to bring them to market. Senators Bayh and Dole recognized this problem and their bill allowed research institutions to keep possession of the patent rights their research produced.

In mid-December, President Trump presented a plan to lower prescription drug prices by allowing states, drug wholesalers and pharmacies to import some cheaper drugs from Canada. While reducing the cost of medicines is a laudable goal, pharmaceutical importation programs – if implemented safely and effectively – would fail to deliver the promised savings. And if implemented without the necessary safeguards, they would endanger the lives of countless patients. The plan essentially relies upon importing price controls from Canada, which will both undermine innovation and prove unsustainable. As with many “simple solutions” the devil is in the details. Not surprisingly, the Trump Administration’s plan contains very few details on implementation. And it is precisely those details that are expensive and complicated.

Is Congress really going to do anything useful with respect to lowering drug prices? When the question is presented that way the answer almost seems painfully obvious. Of course not. The question is just how bad they will mess things up, and will they destroy the incentive to innovate as they attempt to seek a very worthwhile solution for the problem of growing costs for healthcare. Unfortunately, the political climate in the United States has increasingly become more circus and circumspect than bold and visionary. It is better to do something entertaining and memorable that plays to the crowd than to go about the business of governing the country, not just for the moment, but for the future. And the political structures in place create outright gerrymandering that practically ensure the overwhelming percentage of Representatives have more to fear from a primary challenge than from a contender in the general election. It is no wonder nothing truly useful can get accomplished in Washington, DC.

Once we go down a path of government price controls and compulsory licensing we will have foregone opportunities for other, more rational policy choices and will soon find ourselves in a race to the bottom. Of course, making prescription drugs more affordable must be an important, shared goal. But the solutions we pursue cannot risk choking off America’s innovative ecosystem that leads the world in discovering new cures and treatments. As Nobel laureate and NIH Director Harold Varmus said in 1995, one must first have a new drug to price before one can worry about how to price it.  Letting our federal government import foreign price controls and expropriate patents is not the way to go about it.