By Michelle Flowers
“Help is on the way.” That’s what House Speaker Nancy Pelosi told American patients when she unveiled her sweeping plan to lower drug prices.
Unfortunately, her bill won’t save patients much money. The legislation would reduce total U.S. spending on pharmaceuticals by almost $1 trillion over the next decade — but those savings would go to government staff and insurance companies, not Americans battling disease.
In fact, the bill would hurt patients by making it harder for scientists to develop new life-saving medicines. Speaker Pelosi can do patients a favor by going back to the drawing board.
The bill’s central provision would let the government cap the price of brand name drugs that don’t have many competitors. Capping prices for these drugs would save the government money, but wouldn’t do much about lowering out-of-pocket costs for patients.
The bill would also force drug companies to pick up a large part of the tab for drugs sold in Medicare’s “catastrophic phase.” Patients enter this phase once they’ve spent $5,100 out of pocket, at which point they are only responsible for 5 percent of any prescription’s cost. Medicare covers 80 percent of the cost, while the insurer picks up the remaining 15 percent.
Pelosi’s plan would upend that payment structure. Under the bill, the government would only be responsible for 20 percent of a drug’s cost in the catastrophic phase. Meanwhile, drug manufacturers would be on the hook for 30 percent, allowing insurers to have a smaller percentage of responsibility.
This would save the government money. But it wouldn’t do much to help patients, as most never reach the catastrophic phase.
These price caps would cost drug companies $1 trillion over just 10 years. Over time, these policies would make it harder for scientists to develop new treatments.
It takes more than a decade and over $2.5 billion to bring a single drug to market. The more money drug companies are forced to spend on taxes and fines, the less they’ll have to fund research and development. Pelosi’s bill would particularly harm small biotech firms, who have limited resources but are often on the leading edge of medical innovation.
The United States leads the world in drug development. There are currently more than 4,000 medicines being developed by U.S. researchers — including over 1,000 cancer therapies and more than 200 treatments for heart disease and stroke. All told, U.S. firms are responsible for producing close to 60 percent of new medicines.
Speaker Pelosi’s plan would jeopardize this research. Patients around the world would have no hope of seeing new treatments or cures.
Michelle Flowers is president of the Oncology Managers of Florida, a professional organization committed to providing information and educational support as well as implementing changes in medical policies and governmental issues for oncology practice managers in Florida.