Three reasons the Administration should abandon its International Pricing Index proposal

Nicole Longo
Nicole Longo January 31, 2020

Three reasons the Administration should abandon its International Pricing Index proposal.

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According to the Council of Economic Advisers, “Heavy-handed government intervention may reduce drug prices in the short term, but these savings are not worth the long-term cost of American patients losing access to new lifesaving treatments.” By that logic, the Administration’s proposed International Pricing Index (IPI) model should be abandoned immediately.

  1. Would the IPI put seniors’ access to medicines at risk? Yes.

    Patient access suffers when governments interfere in the market and resort to dictating the price of a medicine. Americans should not have to wait years longer to access the latest medicine, but that’s exactly what has happened in countries where governments set the price of medicine. For example, patients in Canada have to wait 13 months or more, on average, for new cancer medicines. These extended delays could mean the difference between life and death for American patients in need of treatment options. Beyond delays in the availability of new medicines, in countries where the government interferes many new medicines are never made available. While 96% of new cancer medicines are available to patients in the United States, only 65% and 56% of new cancer medicines are available to patients in France and Canada, respectively. 

  2. Would the IPI threaten the development of future treatments and cures? Yes.

    According to the U.S. Food and Drug Administration’s Center for Drug Evaluation and Research, 69% of the novel medicines approved in 2019 were approved in the United States before any other country. America achieved this global leadership in biomedical innovation by rejecting harmful policies that disincentivize innovation. In fact, if the United State had adopted government price setting, like what is proposed in the IPI, there would have been 117 fewer new medicines developed between 1986 and 2004. Moreover, an analysis found that if foreign governments stopped using international reference pricing to set the price of medicines, patients could benefit from 10 to 13 additional new medicines per year. And in a survey, 77% of PhRMA member companies said they think IPI would affect their ability to pursue current or future R&D projects and 92% foresaw risk of reductions in Part B R&D investments overall.

  3. Would the IPI save seniors money? For most, no.

    According to one analysis, less than 1% of seniors in Medicare would see reduced out-of-pocket costs if the IPI model includes the 27 medicines listed in the HHS Assistant Secretary for Planning and Evaluation report that accompanied the IPI proposal. That’s because most seniors that rely on Medicare Part B have supplemental insurance coverage for their out-of-pocket costs. Essentially, the Administration is proposing upending the entire Medicare Part B program that seniors have come to rely on with no guarantee it will provide any measurable benefits. Ironically, the Administration walked away from its Medicare proposal that would have actually lowered seniors’ out-of-pocket costs when it withdrew its proposed rebate rule.

We do not need to upend Medicare Part B, restricting access to today’s medicines and tomorrow’s cures, to help patients afford their medicines. The Administration has lost sight of what seniors need and are proceeding with a flawed proposal that will only cause harm. Washington should stand up for seniors and demand the Administration throw away its IPI proposal.

Topics: Medicare, Part B, CMMI, Prescription for Medicare, International Reference Pricing