The Senate’s latest price setting proposal will undermine: American medical innovation

Nicole Longo
Nicole Longo July 27, 2022

The Senate’s latest price setting proposal will undermine: American medical innovation.

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Members of Congress continue to push a misguided drug pricing proposal under the guise of negotiation as part of the reconciliation package. This proposal is nothing short of government price setting and, if implemented, would require the government to dictate prices and choose winners and losers when it comes to which diseases are likely to see new treatments. Instead of addressing a broken insurance system, the most recent proposal doubles down on bad policies that will threaten patient access to medicines and future innovations. This is the second blog in a three-part series where we discuss the very real threats of the proposal.

The latest Senate reconciliation package undermines:

  • Access to medicines
  • Innovation for lifesaving medicines
  • The health care system

The threat to innovation.

  • This policy disincentivizes critical post-approval research. The proposal would impose government price setting as early as nine years after approval for small molecule drugs and 13 years after approval for biologics. These pre-defined times after approval completely ignore the natural R&D process that continues long after a medicine is approved. It, in effect, guts existing incentives necessary to support further investment in post-approval R&D, creating uncertainty for advances that help meet unmet patient needs and stopping progress in its tracks. Post-approval R&D, often including costly and labor-intensive clinical trials, paves the way for important advances in patient care, such as the discovery of new uses for medicines, including in pediatric and rare disease populations. In fact, nearly 60% of oncology medicines approved a decade ago received additional approvals in later years, and most of those were seven or more years after approval. That’s according to an analysis of FDA approval data conducted by Partnership for Health Analytic Research. Congress should not stand in the way of continued progress toward treating cancers.

  • This policy upends incentives for biosimilar and generic drug development. The drug pricing proposal imposes government price setting in a way that fails to fully accommodate the time needed for generics and biosimilars to come to market. In fact, the plan fully ignores the existing legal frameworks established by Congress for when companies can legally and practically bring generic or biosimilar competitors to market. And the government price setting for medicines may even last beyond when a biosimilar or generic competitor comes to market, depending upon when a competitor launches. Why would biopharmaceutical companies, generic manufacturers and the venture capital community have the incentive to invest in biosimilar and generic development if the government can set the price long before they even come to market?

Learn more about why government price setting is bad policy and better ways Congress could help patients access and afford their medicines. Stay tuned for our next blog when we discuss how price setting will undermine the health care system and read our previous post about how this policy will undermine access to medicines.

Take action: Tell Congress to protect access to new medicines.

Topics: Research and Development, Policy Solutions, Government Price Setting