U.S. President Joe Biden and Sen. Bernie Sanders, I-Vt., Remain Alarmingly Unfazed by the Damage They’ve Done to America’s Drug-development Ecosystem

Speaking at a White House event with Sen. Bernie Sanders, I-Vt., very recently, President Biden crowed about his rapidly progressing scheme to impose price controls on prescription drugs. “Finally — finally we beat Big Pharma,” he said to Sanders.

Unfortunately for Americans — and indeed, patients everywhere — the Democrats’ assault on the drug industry will result in fewer cures, less access to state-of-the-art medicines, and more avoidable death and suffering.

Democrats gave the federal government the ability to dictate the prices of prescription drugs through Medicare as part of the 2022 Inflation Reduction Act:

• Price controls on the first ten drugs will take effect at the beginning of 2026.
• The following year, 15 more will be ensnared by price controls.
• In 2028, the government will come for 15 more.
• And in 2029 and thereafter, 20 drugs per year will be subject to price controls.

Historically, the United States has eschewed price controls on prescription drugs, and for good reason.

Such heavy-handed market interventions have stifled innovation and reduced the availability of life-saving medicines every place they’ve been tried.

Consider Europe’s experience over the last half-century.

As recently as the late 1970s, European drug companies led the world in the invention of medicines, releasing twice as many new drugs as their American counterparts.

After a wave of drug price-control reforms swept the continent, however, innovation slowed drastically.

Today, the United States is the world’s undisputed leader in drug development.

By capping drug prices — and thus the return that drug companies could make bringing new drugs to market — countries in Europe and elsewhere, including Japan and Canada, undermined the economic incentive to invest in drug development.

And they continue to pay for this mistake.

Their pharmaceutical ecosystems have shrunk.

And their citizens haven’t had timely access to the newest medicines that drug companies turn out.

Drug companies are generally reluctant, of course, to sell their latest inventions in price-controlled markets.

Only 61% of the new medicines launched between 2012 and 2021 were available in Germany as of October 2022.

Only about half were available in France. And just 45% were available in Canada.

Here in America’s comparatively free market for prescription medications, patients had access to 85% of new drugs.

America’s higher drug prices buy that kind of widespread access. Sanders thinks they simply reflect greed.

In the years before the IRA’s drug price controls became law, he said, “The drug companies continued to go along their merry way and raise prices anytime they wanted, to any level that they wanted, for any reason that they wanted.”

Drug companies have a limited window in which to recoup the $2.6 billion, on average, they spend bringing a new drug to market.

And they only have an exclusive franchise over the products they develop for a limited time. After their intellectual property protections expire and other drugmakers can make generic copies, prices plummet.

The IRA’s price controls narrow the timeframe during which companies can recoup their drug-development expenses even further. Small-molecule drugs are subject to government price caps nine years after approval; biologics get hit with them 13 years after approval.

If companies and investors judge that they can’t earn a return on their outlays before price controls kick in, then they’ll quit spending money on drug development.

A recent analysis by the consulting firm Vital Transformation estimates that, over the next decade, the Biden price controls could cost the world 139 new drugs.

Had these policies been in place in 2014, the study notes, the world would have anywhere from 24 to 49 fewer medicines right now.

Biden and Sanders appear alarmingly unfazed by the damage they’ve unleashed on America’s drug-development ecosystem.

Potentially life-saving therapies will never reach patients because of the price controls they’re implementing.

But hey, at least Biden and Sanders can say they landed a blow on Big Pharma.

Sally C. Pipes is president, CEO, and the Thomas W. Smith fellow in healthcare policy at the Pacific Research Institute. Her latest book is “False Premise, False Promise: The Disastrous Reality of Medicare for All,” (Encounter Books 2020). Follow her on Twitter @sallypipes. Read Sally Pipes’ Reports — More Here.

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