CCAGW Opposes Drug Price Control Amendments to S. 1895 | Council For Citizens Against Government Waste

CCAGW Opposes Drug Price Control Amendments to S. 1895

June 24, 2019

Health, Education, Labor, and Pensions Committee
U.S. Senate
Washington, D.C. 20510

Dear Senator:

On Wednesday, you are scheduled to consider S. 1895, the Lower Health Care Costs Act. On behalf of the more than 1 million members and supporters of the Council for Citizens Against Government Waste (CCAGW), I ask that you oppose any amendments that would implement government price control policies for pharmaceuticals, which include drug importation, adopting foreign drug prices, binding arbitration, and similar policies.

Throughout history, price controls have distorted markets and hurt the very people that are supposed to benefit from these policies. Instead of utilizing the heavy hand of government control, Congress should take action to create an environment that stimulates market competition to lower drug costs.

Do not adopt foreign countries’ price controls:

Drugs are less expensive in Europe and Canada because they utilize price controls and the threat of compulsory licensing, or stealing intellectual property (IP), to keep drug prices artificially low. These actions have adversely affected innovation, research, and development within their countries, leading them to free-ride on U.S. research as stated in the February 2018 Council of Economic Advisers report, “Reforming Biopharmaceutical Pricing at Home and Abroad.” CCAGW opposes the Trump administration’s ill-advised proposed International Pricing Index plan, or anything similar thereto. A better policy would be negotiating improved trade deals that protect our IP.

Do not allow drug importation:

Importation assumes European and Canadian sellers will not increase the costs of their price-controlled drugs or that pharmaceutical companies would sell more drugs to a country than its population needs. As the Food and Drug Administration (FDA) has often pointed out, importing drugs can be dangerous for several reasons: other countries have different regulations and standards compared to the U.S.; drug dosages may be different; a Canadian website claiming to sell legitimate drugs does not make it so; and, importation invites counterfeiting and adulteration from unscrupulous actors.

Do not allow binding arbitration or permit the Health and Human Services (HHS) secretary to “negotiate” drug prices in Medicare:

Binding arbitration proponents claim it is an even-handed, competitive way to negotiate drug costs in Medicare, similar to what occurs in professional sports. Nothing could be further from the truth. In baseball, the teams and players jointly agree on a panel of three arbitrators who review salary requirements and offers, along with supporting evidence from the players and teams, to reach a binding decision. If arbitration is utilized in Medicare, the government will be the judge, jury, and executioner on when and how it will be used, and the pharmaceutical company has no way to protect its intellectual property. It will be faux negotiation, where the HHS secretary sets the price. Instead, private negotiation should continue to be utilized in Medicare Part D, while Medicare Part B could be reformed to allow more free-market incentives to lower costs.

Competition drives down costs and encourages innovation. Rather than applying price controls and other heavy-handed measures, Congress should make sure the FDA is utilizing generic user fees in a responsible way, such as reducing multiple drug review cycles with predictable procedures and applying the policies found in the 21st Century Cures Act that are intended to modernize and speed up clinical trials. Congress should also ensure that trade agreements include provisions that would stop countries that can afford to pay for novel drugs from free-riding on innovation paid for by American patients and taxpayers.

All votes on S. 1895 will be among those considered for CCAGW’s 2019 Congressional Ratings.

Sincerely,

Tom Schatz
President, CCAGW

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