Unlike the Veterans Administration, Medicare is prohibited from negotiating drug prices with pharmaceutical companies. Medicare and patients are forced to pay whatever drug companies choose to charge, resulting in excessive costs to Medicare, patients unable to afford much needed medications and large profits for drug companies. This corruption of the marketplace exists despite the fact that taxpayer-funded research contributed to the development of all 210 new drugs marketed between 2010 and 2016. Taxpayers subsidize profitable drugs they cannot afford to buy.
The House of Representatives recently passed legislation (HR 3) that begins to remedy this by allowing Medicare to negotiate prices of some drugs. Alas, “our” congressional representative, Vicky Hartzler, opposed this much-needed reform. She criticizes the bill in a Feb. 2 Missourian letter that is replete with distortions and inaccuracies. She cites a study of the bill by the Congressional Budget Office. Hartzler writes, “The CBO points to government price-fixing as an obstacle to creating and bringing new drugs to market. This study estimates that government price-fixing could lead up to 100 fewer cures brought to market… .” Nowhere in the official CBO report, however, is there any mention of “price-fixing.” The report repeatedly refers accurately to negotiating drug prices. “Price-fixing” is Hartzler’s pejorative, inaccurate label. The VA negotiates drug prices for veterans. Does Hartzler label this price-fixing?
It appears to me that Hartzler’s figure of “100 cures” is fabricated. The CBO estimates that “the bill … would lead to a reduction of approximately eight to 15 new drugs coming to market over the next 10 years. (The Food and Drug Administration approves, on average, about 30 new drugs annually, suggesting that about 300 drugs might be approved over the next 10 years.)” Eight to 15 new drugs lost over a 10-year period is far from “100 cures,” even if we assume that every new drug constitutes a cure. In fact, few new drugs are “cures.”
Drug companies spend billions of dollars annually on promotions to physicians (including gifts and free meals) and direct-to-consumer advertisements and millions on political campaigns and lobbying. A company genuinely committed to innovation and research could certainly redeploy some of this money to redress any loss of revenue from price negotiations and thus maintain the current pipeline for new drugs. Drug companies choose how to invest their abundant resources. Why should they sacrifice innovation, research and patient health to advertising and political maneuvering?
The CBO also estimates that HR 3, if enacted, would save Medicare $345 billion over a six-year period, a fact Hartzler neglects to mention. In contrast, the CBO estimates that the Trump Administration’s plan to reduce drug prices would add $170 billion to the cost of Medicare over 10 years. Hartzler touts HR 19, a bill that awaits scrutiny by the CBO.
Robert Blake, MD, is an emeritus professor of Family and Community Medicine at MU.