Reject Price Control Amendments to H.R. 1628

July 27, 2017

U.S. Senate
Washington, D.C.  20510

Dear Senator,

As you consider H.R. 1628, the Council for Citizens Against Government Waste (CCAGW) expects that several amendments will be offered that would institute or double down on government regulation of pharmaceutical prices.  Instead of utilizing the heavy hand of government control, Congress should take further action to create an environment that stimulates market competition to lower drug costs.  On behalf of the more than 1.2 million members and supporters of CCAGW, I ask that you oppose any efforts to implement drug importation, extend Medicaid rebates, thwart the non-interference clause in Medicare Part D, and impose certain transparency requirements.

Do Not Allow Drug Importation:

Drugs are less expensive in Europe and Canada because they utilize price controls, which has also adversely affected innovation, research, and development.  The Congressional Budget Office (CBO) has stated that importing pharmaceuticals would have a negligible impact on drug prices.  Furthermore, as the Food and Drug Administration 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; claiming that an internet website is a Canadian pharmacy does not make it so; and, importation invites counterfeiting and adulteration from unscrupulous actors.

Do Not Increase Medicaid Rebates or Extend Them into Medicare Part D:

Increasing Medicaid rebates, which are a form of price controls, or utilizing them in Medicare Part D, would further distort the U.S. pharmaceutical marketplace.  It is likely that beneficiary premiums would rise and formularies would be restricted.  Competitive, private-sector negotiations have been instrumental in making Medicare Part D a successful government-created program, with high beneficiary satisfaction rates.  In 2005, the CBO estimated Medicare Part D would cost taxpayers $172 billion in 2015; its cost was $75 billion.

Do Not Allow the Secretary of HHS to “Negotiate” Drug Prices in Medicare Part D:

The government does not negotiate drug prices; it uses price controls to lower prices.  Price controls, whenever they have been used, are extremely disruptive and cause market distortions and shortages, whether utilized with pharmaceuticals or any other product or service.  The private sector must be allowed to continue to negotiate drug prices in Medicare Part D.

Do Not Impose Transparency Requirements on Negotiations Among Participants in the Pharmaceutical Supply Chain:

I respectively urge you to read a July 2, 2015, Federal Trade Commission commentary, “Price Transparency or TMI,” which explained why exposing the details of how prices are negotiated among participants in the pharmaceutical supply chain can have negative consequences for consumers and competition.  It states in part, “When it goes too far, it can actually harm competition and consumers.  Some types of information are not particularly useful to consumers, but are of great interest to competitors.”  The article notes, “information disclosures allow competitors to figure out what their rivals are charging, which dampens each competitor’s incentive to offer a low price, or increases the likelihood that they can coordinate on higher prices.”

According to R&D Magazine’s Winter Global R&D Forecast, the U.S. dominates in the biopharmaceutical research sector at 56 percent, while Germany is the closest competitor at 16 percent.  Adopting additional pharmaceutical price control measures will erode the nation’s advantage, destroy thousands of biopharmaceutical jobs, and stifle the development of promising new therapies.

All votes on H.R. 1628 will be among those considered for CCAGW’s 2017 Congressional Ratings.

Sincerely,

Tom Schatz
President, CCAGW

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