Guest Columnist

Medicare plan would hurt Iowa seniors

Chief Executive Officers of pharmaceutical companies testify before the Senate Finance Committee on
Chief Executive Officers of pharmaceutical companies testify before the Senate Finance Committee on "Drug Pricing in America: A Prescription for Change, Part II" Feb. 26, 2019 in Washington, DC. From left to right are Richard A. Gonzalez, chairman and CEO of AbbVie Inc; Pascal Soriot, executive director and CEO of AstraZeneca; Giovanni Caforio, chairman of the board and CEO of Bristol-Myers Squibb Co.; Jennifer Taubert, executive vice president and worldwide chairman of Janssen Pharmaceuticals, Johnson. (Win McNamee/Getty Images North America/TNS)

Sen. Chuck Grassley has always looked out for Iowa’s seniors. Throughout his career, the senator has championed measures to strengthen Medicare and Social Security and worked to make lifesaving medicines more affordable.

It’s time for Sen. Grassley to speak up for Iowa’s seniors once again.

The Trump administration is poised to issue a draft rule that would impose price controls on advanced medicines covered by Medicare. As we’ve seen time and time again, price controls prevent patients from accessing the newest treatments for cancer and a host of other debilitating diseases.

Let’s hope Sen. Grassley uses his clout as chairman of the powerful Senate Finance Committee to fight this shortsighted reform.

The rule, to be issued by the Department of Health and Human Services, targets Medicare Part B, which covers highly potent medicines administered in physician’s offices and hospitals. Close to half a million Iowans depend on Part B.

Medicare Part B is currently a “buy-and-bill” system. Physicians purchase drugs, administer them to patients, and then bill Medicare. The government reimburses these physicians based on the average sales price of those drugs.

HHS officials think this model costs the government too much money. In 2016, Part B drug expenditures totaled over $29 billion. Spending is high, in part, because the United States pays approximately 80 percent more for drugs covered by Part B than countries like Canada, France, Sweden, and the United Kingdom.

Drugs are cheaper abroad because most developed countries impose price controls on pharmaceuticals. For instance, France’s Health Products Pricing Committee dictates the prices of brand-name medications. The United Kingdom’s National Institute for Health and Care Excellence effectively caps prices too.

If manufacturers refuse to accept the price caps set, governments simply refuse to cover the drug for patients — regardless of how sick they are.

In an attempt to rectify this disparity, HHS wants to tie Part B reimbursements to the average prices paid in 14 other countries, most of which implement price controls. By indexing Medicare payments to foreign price controls, this reform would effectively import those controls — and all the problems they cause — to America.

Patients in countries with price controls struggle to access the latest medicines. Swedes waited seven months, on average, to gain access to new drugs released between 2011 and 2017. In France, Canada, and Italy, patients were kept waiting well over a year.

Meanwhile, Americans had access to 90 percent of these breakthrough treatments immediately upon their release. That’s because drug companies are eager to launch their products in our free market.

HHS’ new proposal would flip the script on American patients. If the United States began imposing price controls, manufacturers would have no incentive to rush their drugs to American shelves.

In addition to reducing access to groundbreaking medicines, price controls would prevent researchers from inventing new state-of-the-art therapies. Drug development is a risky and expensive endeavor. Bringing just one new medicine to market costs almost $3 billion and takes over a decade. Fewer than one in eight experimental drugs that enter clinical trials exit the testing process with an FDA stamp of approval.

Price controls would make it nearly impossible for companies to recoup their investments. That would eliminate the economic incentive to invest in future research projects.

Using price controls to lower drug prices is as silly as a farmer eating his seed corn — it may feed him in the short term, but ultimately, he has no more crops. Similarly, controlling drug prices may temporarily lower costs for current patients, but people could die unnecessarily in the future because the next generation of cures may never be developed.

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Iowa’s seniors can’t afford for innovation to dry up. More than 57 percent of Iowans have at least one chronic disease, while a quarter have two or more. Over the next decade and a half, medical advances are projected to save almost 190,000 Iowan lives.

HHS’ proposal puts these breakthroughs — and these patients — at risk. Sen. Grassley has stood up for Iowa’s most vulnerable patients for many years. He can pull through for them once again by doing everything in his power to stop this dangerous reform.

• Don Racheter is a retired political scientist and former president of the Iowa Association of Political Scientists.

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