By Wayne Winegarden Guest Columnist
Posted
Dec 4, 2018 at 5:52 PMUpdated
Dec 4, 2018 at 5:52 PM
Health
and Human Services Secretary Alex Azar just released a sweeping proposal that
would drastically change how Medicare pays for advanced cancer therapies and
other potent medicines. The plan relies on foreign price controls to reduce
drug spending by $17 billion over five years.
Although
drug spending may decline, the plan could increase healthcare spending
elsewhere, as patients inevitably lose access to medicines. So while the
savings is questionable, the negative health impact on patients is certain.
Sec. Azar ought to find a better way.
The
changes would affect Medicare Part B, which covers drugs administered in
doctor’s offices, clinics, and hospitals. These medicines include injectable
treatments for cancer and other diseases.
Doctors
buy these medicines themselves and then bill Medicare for reimbursement. The
government pays doctors the average U.S. price of the drug, plus a markup to
cover administrative costs.
Administration
officials correctly note these drugs cost more in the United States than in
other countries, which impose strict price controls on medications. These
countries contribute little to global research and development, but reap the
rewards of R&D conducted in the United States.
To end
this “global freeloading,” the administration wants to create an “International
Pricing Index.” Medicare would no longer set reimbursements based on the
average U.S. sales price. Instead, it would tie reimbursements to the prices
paid in 16 other countries -- a practice known as “reference pricing.”
These
countries enjoy lower drug costs, thanks to their price controls. But this
comes at a cost.
Take
the United Kingdom, where a government agency makes unilateral decisions about
which medications are worth the money. British patients can’t obtain many of
the newest medications that Americans take for granted. Americans could access
roughly 90 percent of all the medicines released worldwide between 2011 and
2017. British patients could only access two-thirds of those drugs.
In
short, the administration’s proposal would lower domestic prices -- but only by
restricting patients’ access to state-of-the-art medicines.
Imposing
price controls would also have a chilling effect on research and development.
Pharmaceutical investors won’t pour billions into risky research projects if
there’s little chance to earn a return. Breakthrough cures may go undiscovered,
dooming millions of future patients.
President
Trump has repeatedly promised to protect Americans from foreign freeloaders.
His trade negotiators have bashed other countries’ reference pricing schemes.
And his administration has successfully strengthened intellectual property
protections in the revised free trade deal with South Korea and the new United
States-Mexico-Canada Agreement. These stronger IP protections will help create
more accurate, market-based prices for U.S. drugs.
Given
the anti-price-control actions taken by the rest of the administration, it’s
shocking that Sec. Azar is embracing such a wrongheaded policy. The proposal
might save the government some money, but it would make it harder for patients
to get medicines they need.
Wayne
Winegarden is the senior fellow in business and economics at the Pacific
Research Institute and the Principal of Capitol Economic Advisors.
https://www.houmatoday.com/news/20181204/opinion-medicare-price-controls-would-harm-patients-and-workers
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