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Four reasons why the radical Pelosi Plan is the wrong approach

Tom Wilbur   |     September 24, 2019   |   SHARE THIS

Speaker of the House Nancy Pelosi recently unveiled a radical plan that would restrict and fundamentally change how patients access medicines in the United States. It would threaten our country’s global leadership in developing innovative, lifesaving treatments and cures and force patients to face the uncertainty of a health care system where the government sets prices for critical medicines and import foreign determinations of the value of medicines. Such a system allows the government to dictate which disease areas are worthy of future research and represents a de facto nationalization of the innovative biopharmaceutical industry.

Here are four ways the Pelosi plan is the wrong approach for patients, the U.S. health care system and American innovation.

  • Imposes price setting, not negotiation. Far from “negotiation,” this plan would instead give the government unprecedented authority to set prices for medicine in both public and private markets. Prices for selected innovative medicines would be limited to the average amount that six countries (Australia, Canada, France, Germany, Japan, and the United Kingdom) pay plus 20% and no more. If biopharmaceutical companies do not meet this new price, the government can force companies to pay a massive excise tax of as much as 95% of the gross sales for the medicine. Government sets the price and biopharmaceutical companies comply or face a tax that is almost the full cost of the medicine – how is that negotiation?

  • Imports access-restricting policies. In countries that use international reference pricing and other government price controls as proposed in Pelosi’s plan, patients face significant restrictions in accessing new medicines and treatment options. That’s a fact. Research demonstrates just how drastically government price setting reduces access for patients and results in fewer or delayed treatment options. For example, nearly 90% of new medicines launched since 2011 are available in the United States compared to just 50% in France, 36% in Australia, and 46% in Canada.

  • Drastically chills investment in R&D. According to an internal PhRMA analysis, Pelosi’s plan could cost the biopharmaceutical industry as much as $1 trillion over 10 years – nearly 7 times the impact of the Senate Finance bill and 4 times total annual U.S. net revenues earned by the industry. This drastic cut would jeopardize the almost $100 billion biopharmaceutical companies invest annually in R&D and eliminate hope for patients waiting for new cures and treatments. This plan would erode incentives that are critical to support investment into the risky and uncertain R&D process for complex diseases such as Alzheimer’s Disease. And while House Democrats have offered false assurances that radical drug pricing plans would generate billions of dollars for the National Institutes of Health (NIH) to invest in the development of new medicines, they ignore the fact that the NIH’s role in drug development is limited and largely focused on advancing basic science, not developing new medicines.

  • Puts American jobs at risk. The biopharmaceutical sector directly employs more than 800,000 workers in the United States, with workers’ average compensation more than twice the national average across all industries. And because of its large supply chain, U.S. biopharmaceutical jobs have a high multiplier effect resulting in the industry supporting a total of more than 4 million jobs across the economy. Those jobs are put at grave risk under Pelosi’s plan and its devastating impact on the economy. If implemented, Pelosi’s plan is projected to cause the permanent loss of nearly 1 million U.S. jobs.

Instead of blowing up the current system, policymakers should pursue practical, bipartisan solutions that prioritize lowering out-of-pocket costs for patients. Congress should make targeted changes to our system such as sharing negotiated savings with patients at the pharmacy counter, lowering coinsurance and smoothing out cost sharing in Medicare Part D, increasing transparency on costs for patients, and promoting value-based payment.

Tom Wilbur

Tom Wilbur Tom Wilbur is a director of public affairs at PhRMA focusing on the organization’s federal advocacy priorities including intellectual property and Medicare Part D. Prior to joining PhRMA, Tom worked in national and state politics for nearly a decade, most recently on Capitol Hill as a strategic communicator and campaign manager. Tom is a proud Michigander and in his spare time enjoys reading, live music, and spending time with friends and family cheering on Detroit sports teams.

Topics: Drug Cost, Out of Pocket Costs, Prescription for Medicare, Pelosi Plan

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