Ross Marchand Posted: Sep 14, 2020 10:04 AM
The opinions expressed by columnists are their
own and do not necessarily represent the views of Townhall.com.
As campaign
season kicks into high gear, President Trump is trying to make his case to the
American people that he will fight for them. In the age of the deadly COVID-19
pandemic, that means ensuring that patients across the country have access to
the critical medications they need to survive. Unfortunately, though, a new executive order (EO) signed by
President Trump will impose onerous price controls on lifesaving drugs at the
worst possible time. This reckless policy will make it far harder for producers
to research cutting-edge cures, while ensuring shortages at more than 60,000 community pharmacies across the
country. President Trump should ditch this failed policy and embrace markets
and competition in healthcare.
On September
13, President Trump announced an order tethering drugs covered under Medicare
Parts B and D to artificially low prices in other countries. Under the status
quo, the prices paid by Medicare for seniors’ medications are determined by a market-based
“average sales price” (plus commission for
doctors). While far from perfect, this system takes stock of supply and demand
in the private marketplace and incorporates discounts such as manufacturers’
rebates. The EO ushers in a “most favored nations” scheme
that would require Medicare to take the drug prices paid by other developed
nations into account when determining its own reimbursement rates. The idea is
for the U.S. to get an even better deal on medications than other first-world
countries.
There’s just
one small problem: the countries the U.S. would be relying on to set drug
prices have socialized healthcare systems. Sure, nations such as the United
Kingdom, France, and Germany all have different healthcare systems and diverge
in significant ways. But, in all these countries, bureaucrats arbitrarily
set drug prices instead of relying on market fundamentals. And
this dangerous assumption that government officials know better than producers
results in unrealistically low prices that fail to make up for research, development
and regulatory costs. Whether in the U.S. or Europe, bringing a medication to
market costs billions of dollars and often takes
more than a decade. And when manufacturers cannot charge the prices needed to
recoup these astronomical costs, they respond by curtailing production and
cutting back research into new medications.
Europe has
seen these devastating shortages firsthand. According to a 2019 survey by the
European Association of Hospital Pharmacists, 95 percent of pharmacists across
the continent have cited the problem of medication shortages. An astounding 81
percent of these professionals experienced product shortages more than three
times in the past year. Nearly half of all pharmacists cited regular shortages
for oncology (cancer) drugs, while more than 30 percent noted the persistent
scarcity of statins. Patient and healthcare groups in Europe have pressed
European Union bureaucrats to do something about these significant shortages,
but regulators care more about talking tough to
producers than actually fixing the issue.
While there
are some drug shortages in the U.S., strong intellectual property protections
and pricing flexibility keep problems to a minimum. In most recent years, the
Food and Drug Administration has reported 50
or fewer new shortages per year out of approximately 20,000 prescribed products approved for
marketing in the U.S. Not all medications are used equally of course, but patients
typically face few issues procuring common medications such as statins and
routine vaccinations.
And as
manufacturers continue to produce these medications, they’re hard at work on a
coronavirus treatment. Implementing price controls will stymie this promising
research, making life needlessly difficult for millions of patients waiting on
treatments for deadly diseases such as COVID-19.
The “most
favored nations” policy will set a disturbing precedent for government meddling
and force research and production elsewhere. This would not only set back the
fight to beat back coronavirus, but also undermine President Trump’s campaign
message of American resurgence. America can bounce back stronger and more
resilient than ever, but only if we beat back the coronavirus by using markets
instead of government intervention in healthcare.
Ross
Marchand is a senior fellow for the Taxpayers Protection Alliance.
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