America’s leadership in pharmaceutical innovation depends on rewarding companies that develop better treatments, not penalizing them for improving medicines that already exist. Medicare should encourage innovations that make healthcare more effective and affordable — not make them harder to bring to market.
Price controls undermine the financial incentives that make scientific breakthroughs possible. Yet the Centers for Medicare and Medicaid Services wants to subject certain improved versions of existing medicines to price controls years earlier than under current policy.
The agency can’t even reliably estimate how much money its proposed change would save. But it’s apparently willing to gamble with future medical innovations anyway.
Under the Inflation Reduction Act of 2022, Medicare can impose price controls on certain prescription drugs nine years after they receive approval from the Food and Drug Administration. For biologic medicines, which are generally derived from living cells, price controls can take effect after 13 years.
Under current policy, when a drugmaker adds an active ingredient to an existing medicine to create a new treatment, the clock generally starts over.
The newer medicine gets its own timetable for price controls.
CMS wants to change that policy when the added ingredient allows a medicine to be administered differently — for example, through an injection rather than an intravenous infusion.
The agency would use the original medicine’s approval date, potentially subjecting the newer treatment to price controls years sooner.
CMS argues that the change is necessary to prevent drugmakers from introducing new formulations to evade Medicare’s price controls. But it hasn’t demonstrated how widespread this supposed problem is.
Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.
Gov’t Price Controls on Prescription Drugs Still a Bad Idea
Sally C. Pipes
America’s leadership in pharmaceutical innovation depends on rewarding companies that develop better treatments, not penalizing them for improving medicines that already exist. Medicare should encourage innovations that make healthcare more effective and affordable — not make them harder to bring to market.
Price controls undermine the financial incentives that make scientific breakthroughs possible. Yet the Centers for Medicare and Medicaid Services wants to subject certain improved versions of existing medicines to price controls years earlier than under current policy.
The agency can’t even reliably estimate how much money its proposed change would save. But it’s apparently willing to gamble with future medical innovations anyway.
Under the Inflation Reduction Act of 2022, Medicare can impose price controls on certain prescription drugs nine years after they receive approval from the Food and Drug Administration. For biologic medicines, which are generally derived from living cells, price controls can take effect after 13 years.
Under current policy, when a drugmaker adds an active ingredient to an existing medicine to create a new treatment, the clock generally starts over.
The newer medicine gets its own timetable for price controls.
CMS wants to change that policy when the added ingredient allows a medicine to be administered differently — for example, through an injection rather than an intravenous infusion.
The agency would use the original medicine’s approval date, potentially subjecting the newer treatment to price controls years sooner.
CMS argues that the change is necessary to prevent drugmakers from introducing new formulations to evade Medicare’s price controls. But it hasn’t demonstrated how widespread this supposed problem is.
Read the entire op-ed here.
Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.