Medicine price setting might appeal to voters but will cost patients

As policymakers search for potential cuts to the national budget, they risk jeopardizing the country’s most cost-effective use of healthcare dollars: biomedical innovation regarding vaccines , prescription drugs, and emerging therapies, including antibodies. As the nation rapidly ages, protecting this pipeline of medicine will not only improve health outcomes but will do so at a lower cost by reducing more expensive hospital and primary care.

The administration’s latest plan gets the prescription wrong by doubling down on the Inflation Reduction Act’s medicine price setting feature. The program has not yet gone into effect and has unclear benefits, but the administration has already allocated $3 billion in new government spending to make it work, and there is talk of expansion. While it may save costs today, federal price setting for medicine and vaccines discourages investment in the type of clinical development that is most efficient: post-market studies for new indications and low-cost drugs such as biosimilars and generics.

As research shows , incentives instead ought to be focused on attracting investment in efficient healthcare for seniors. Policy can foster biomedical innovation by encouraging investment in prevention and treatments that can reduce larger health costs and improve quality of life. From cancer to Alzheimer’s, osteoporosis to cardiovascular disease, obesity, and HIV, these related costs are exploding with aging. Biomedicine that keeps us out of hospitals and long-term care serves both healthy aging and fiscal sustainability.

For example, 30 years ago, HIV was a death sentence and a costly health management burden. Today, more than half of the people living with HIV in the United States are over 50, and a growing number live with HIV into their 70s and beyond. Post-market clinical studies helped identify combinations of effective treatments, reducing HIV to nontransmittable levels. These treatments have made HIV a manageable disease and mitigated much heavier cost and quality-of-life burdens.

Likewise, consider the pipeline for cancer medicine: more than 49% of all Food and Drug Administration treatment approvals are for new cancer treatments, and 27% of new drug and biologic approvals are cancer-related. Drugs for cancer are often approved for people with advanced disease and then studied in people who have less advanced forms of the disease post-market. This facilitates earlier intervention and disease suppression. Price controls, such as those in the Inflation Reduction Act, would lead to 135 fewer new drugs being approved between 2021 and 2039. Simply put, the president’s Cancer Moonshot proposal will be impossible to attain thanks to the price-setting mechanisms of the Inflation Reduction Act.

There has also been remarkable progress in the search for a cure for Alzheimer’s. As of January 2022, there were 143 drugs in 172 clinical trials to treat the disease. However, the innovation that makes this research possible, which could bring a cure for Alzheimer’s, is threatened by policies that fail to support investment in a robust treatment pipeline. Expectation of revenues stimulates funding research. Why would we want that to stop?

It’s conceivable that in the next several years, we could see a transformation in the availability of treatments for Alzheimer’s and cancer, much like the transformation we saw in HIV. Two-thirds of new drugs introduced in the past decade and 80% of new treatments in the pharmaceutical pipeline originate in the U.S. For the more than 55 million people living with dementia across the globe, the tens of millions worldwide who will receive a cancer diagnosis, and the more than 38 million people living with HIV globally, our ability to support continued investments in medicine research is a lifeline and a pathway for patient communities desperately searching for answers.

In February, the Innovation Center at the Centers for Medicare & Medicaid Services, CMMI, proposed three new payment models that seek to lower the costs of prescription drugs, promote accessibility to treatments, and improve the quality of care. The three models focus on different treatment classes and coverage, including drugs for chronic conditions, gene and cell therapies, and those approved through the FDA Accelerated Approval Program. While we should commend the CMMI for continuing to build on efforts to lower patient costs, true cost savings will only happen if we also support investment treatments both on the market and in development.

The thriving biomedical and life sciences sector has changed the life course for hundreds of millions of people. By promoting a policy that is popular but won’t even solve the budget crisis, policymakers are nakedly appealing to today’s voters while sacrificing future health. The diagnosis is clear: Investment in biomedical innovation will keep us out of hospitals and help keep our healthcare system financially sustainable.