President Trump announced Friday that he will proceed with his plans to peg the prices of certain drugs prescribed largely at doctors’ offices under Medicare Part B to the lower prices that other developed nations pay for those drugs. That may sound good at first glance, but in reality, the move will slow the development of new drugs, consigning countless patients to needless suffering and premature death.
The president said he’s trying to secure the best deal for American patients. But his move will deprive drug companies of billions of dollars in revenue, making it impossible for them to spend the money they no longer earn to develop new drugs.
As Stephen J. Ubl, president of the Pharmaceutical Research and Manufacturers of America, correctly pointed out in a statement after President Trump’s announcement: “It defies logic that the administration is blindly proceeding with a ‘most favored nation’ policy that gives foreign governments the upper hand in deciding the value of medicines in the United States. History proves that when governments take unilateral action to set prices, it disrupts patient access to treatments, discourages investment in new medicines and threatens jobs and economic growth.”
President Trump appears to have an ulterior motive regarding his move against drug companies. He claims — without providing any evidence— that the drug manufacturers working on coronavirus vaccines deliberately withheld the good news of vaccine progress to harm his chances of reelection.
“Pfizer and others even decided to not assess the results of their vaccine, in other words not come out with a vaccine, until just after the election,” the president told reporters Friday at the White House. “That’s because of what I did with ‘favored nations’ and these other elements — instead of their original plan to assess the data in October. So they waited and waited and waited, and they thought they’d come out with it a few days after the election.”
Pfizer Chairman and CEO Albert Bourla has denied that the election had any impact on his company’s announcement of a promising coronavirus vaccine. In an Oct. 16 open letter he wrote that his company was “operating at the speed of science.”
Accusing drug companies of delaying a vaccine to protect us from a disease that has killed more than 254,000 Americans and infected more than 11.9 million is an extraordinarily serious charge, and denigrates the work of everyone involved in development of experimental coronavirus vaccines that we all hope will become available in December.
In addition, believing the president’s claim requires us to believe that drug companies acted in concert before the Nov. 3 election in response to action he didn’t announce until Friday — 17 days later.
In fact, drug companies have moved at record speed to develop coronavirus vaccines and treatments. They don’t rush drugs to approval or slow drug development based on political considerations.
Massachusetts-based biotech firm Moderna announced Monday that its experimental coronavirus vaccine is 94.5 percent effective.
Then on Wednesday, Pfizer and BioNTech revealed that their vaccine has proved 95 percent effective. Pfizer and BioNTech applied Friday for an emergency use authorization from the Food and Drug Administration. The FDA will meet Dec. 10 to consider their application.
To be fair, the Trump administration deserves credit for helping foster the development of several promising vaccine candidates.
Moderna received $955 million in taxpayer money through the administration’s Operation Warp Speed initiative. Pfizer turned down Warp Speed funding, but the government did commit to purchasing hundreds of millions of coronavirus vaccine doses in advance, before the vaccine had gone through trials.
Nevertheless, the research ecosystem made possible by America’s market-based biopharmaceutical sector is what has made developing vaccines and therapies against the coronavirus at such a furious pace possible.
This ecosystem is the reason the United States creates more drugs than the rest of the world. It’s defined by two key features.
The first is strong protections for intellectual property. Without patents and other intellectual safeguards, it would be beyond irrational to invest the nearly $3 billion required, on average, to develop just one successful drug.
It’s important to understand that for every drug that successfully comes to market, many more prove to be unsafe or ineffective — meaning the drug companies can never sell these drugs and never recover their substantial research and development costs. But without conducting expensive research, it’s impossible to know which drugs will be safe and effective.
Robust intellectual property protections ensure that when a drug does make it to market competing firms can’t steal a company’s research and manufacture knock-off products with impunity.
The second feature is that the pharmaceutical sector is governed by market principles, for the most part. Unlike in many other developed countries, the U.S. government generally doesn’t impose price controls on medicines. Drug firms have relative freedom to charge a price that the market will bear. So they have a better chance of recouping their substantial upfront research and development costs.
The relatively free market in the U.S. gives investors the confidence they need to take big risks funding a promising new cancer therapy, a potential Alzheimer’s breakthrough, or, in the current case, a vaccine for COVID-19.
These basic components — property rights and free markets — are the two pillars of our capitalist system that has proven repeatedly to provide greater benefit to ordinary citizens than socialism or communism in countries around the world.
The two pillars have allowed the U.S. drug industry to create a research and development infrastructure unrivaled anywhere in the world. That’s why when the COVID-19 crisis first emerged, U.S. drug firms were able to snap into action and make use of that infrastructure to respond with record speed.
Beyond vaccines, the experimental antibody cocktail produced by New York-based Regeneron has been shown to reduce viral loads and medical visits in high-risk patients infected with the coronavirus. President Trump himself was treated with this antibody cocktail when he was stricken with COVID-19 and praised it afterward for helping him recover.
In addition, Eli Lilly, an Indiana firm, recently won emergency use authorization for its own antibody therapy.
Some have argued that allowing biotech firms to profit from COVID-19 therapies or vaccines is immoral. But such complaints fail to recognize just how much the world stands to gain from these drugs. And the complaints fail to recognize that no business can afford to operate and employ people without a profit — whether it produces drugs, food, consumer electronics or any other product or service.
A successful coronavirus vaccine will save millions of lives and prevent needless suffering around the world, and restore a global economy that has been hobbled by the pandemic. Compared to this astronomical value, any profit that Moderna, Pfizer or BioNTech might turn would be infinitesimally small — not to mention, well-earned.
Moreover, a profit motive isn’t incidental to America’s superiority in drug innovation. It’s an essential component — one that can’t be abandoned without undermining progress towards much-needed treatments and cures.
Without the capitalist system that underpins America’s drug industry, the world would have to wait much longer for the medical breakthroughs that will ultimately win the war against COVID-19 and help the millions of us stricken with other diseases every year.
Sally C. Pipes is President, CEO, and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute. Her latest book is False Premise, False Promise: The Disastrous Reality of Medicare for All (Encounter 2020). Follow her on Twitter @sallypipes.