By Peter J. Pitts
President Donald Trump just announced a sweeping executive order that’d forbid Medicare from paying more for advanced medicines than any other developed country.
This price control scheme, if implemented, would sound a death knell for medical innovation – and potentially for many patients.
Drug development is expensive, time-consuming and full of uncertainty. Just over 10% of experimental drugs that enter clinical trials ever earn the Food and Drug Administration’s stamp of approval. Successfully bringing a single product to pharmacy shelves can take up to 15 years and cost over $2.5 billion.
Just look at the attempts to cure Alzheimer’s, the sixth leading cause of death in America. The FDA has greenlit only four of the nearly 150 promising Alzheimer’s treatments that underwent clinical trials in the last two decades. And all those medications merely alleviate symptoms. There’s still no cure.
Despite these numerous expensive failures, investors and scientists keep trying, in the hopes that a successful drug will recoup its R&D costs and make up for all the dead-ends along the way. Still, important scientific knowledge comes from every failed effort. And knowledge is power in pursuit of public health.
This extensive research wouldn’t happen in any other nation. America’s relatively free market for medicines allows innovators to enjoy the fruits of their labor. This incentivizes investors to put more dollars towards the cures of tomorrow – and explains why U.S. labs engineer the majority of the world’s new medicines.
It’s a different story in countries with price controls.
When government-run healthcare systems can dictate artificially low drug prices, research loses its allure. There would have been 117 fewer new drugs developed between 1986 and 2004 if the United States had imposed price controls, according to one University of Connecticut study.
And price controls don’t merely hurt patients far into the future, either. They have immediate, disastrous effects. Many biotech companies don’t even bother launching their products in price-controlled nations – the marginal revenue isn’t worth the costs.
Consider that Canadian and French patients can access just 56% and 65% of all oncology drugs invented worldwide between 2011 and 2018, respectively. Patients in the United States enjoy access to 96% of all cancer drugs. Anyone who has personally battled cancer, or knows someone who has, understands that quick access to breakthrough drugs can make the difference between life or death.
The Trump administration’s executive order threatens these patients. Our nation is grappling with a deadly pandemic and struggling to curb rising rates of chronic disease – it’s hard to think of a worse time to reduce Americans’ access to medicines and discourage research. Do we really want to slow cutting-edge research into COVID-19 therapies?
There are more than 4,500 drugs in development right now in U.S. labs. Any of those medicines could be the cure to cancer, Alzheimer’s, heart disease, mental illness and other ailments. But if the United States enacts price controls, there’s no telling whether these promising experimental medicines will ever reach pharmacy shelves.