This editorial by Andrew Spiegel was published in The International Business Times on March 23, 2020. Mr. Spiegel is executive director of the Global Colon Cancer Association and Chair of the World Patient Alliance.
President Trump, Price Controls Can’t Combat Coronavirus
The U.S. outbreak of novel coronavirus, COVID-19, has quickly evolved into a national nightmare. Stock markets are fluctuating wildly, whole neighborhoods are in quarantine, and thirteen governors have declared a state of emergency.
President Trump claims he’s doing everything he can to help drug companies fast-track the development of a treatment. In a recent meeting, he told top pharmaceutical executives, “if anybody delays you, please call me.”
The president can save himself a phone call by taking a hard look in the mirror. While expecting companies to hastily address this public health emergency, he’s simultaneously been promoting reforms that will devalue their innovations and hinder the ability to invest in new research.
In other words, President Trump is compromising his own push for a COVID-19 cure.
The president has long railed against the pharmaceutical industry. Even before stepping foot into the oval office, he claimed the pharmaceutical industry was “getting away with murder” for its pricing practices. And he accused manufacturers of charging “ripoff drug prices.”
Now, more than three years into his term, President Trump’s proposed one shortsighted attempt after another to bring costs down. These drastic proposals threaten to undermine U.S. innovators and the breakthrough therapeutics that patients rely on.
Despite calls to keep drug manufacturing in the United States, the Trump administration recently proposed an ill-considered drug importation scheme. The proposal would allow states, pharmacies and drug wholesalers to import cheaper, price-controlled medicines from Canada.
In addition to the immense regulatory and safety risks, this measure would undercut revenues for U.S. companies who are developing the cures the president so desperately claims to want.
The president has also proposed “indexing” government payments for advanced medicines to the prices paid in other developed countries — most of which have government-run healthcare systems. This reform, which would simply import government price-setting from abroad, could slash drug companies’ revenues by over $1 billion dollars annually, according to a report from PwC.
And yet, President Trump still expects all the public health benefits that come from a robust U.S. pharmaceutical industry to remain. In a recent meeting with top industry executives, he urged them to “accelerate whatever they’re doing in terms of a vaccine.”
The reason is simple. Even without price controls, drug development is extraordinarily risky. It’s typical for investors to devote billions of dollars toward a promising new compound that never reaches the market. Only one compound in roughly 5,000 ever makes it that far.
Companies depend on revenues from successfully marketed drugs to help recoup the cost of failed drugs and pay for future research and development ventures. If the government devalues its creations, it will reduce the amount of money available to invest in new cures.
That would mean fewer innovative treatments for patients, jeopardizing public health. A study from the University of Connecticut estimated that implementing Europe’s price controls would result in 117 fewer new medicines over a 19-year period.
In the midst of a public health crisis, that’d be moving in the opposite direction of what’s needed.
Developing a cure for COVID-19 requires an all-hands-on-deck approach. Worldwide, the virulent illness has infected over 124,000 people and claimed the lives of more than 4,575. And it’s spreading rapidly here in the United States. There have been 1,088 confirmed cases — including 31 deaths — across 38 states and the District of Columbia.
Thanks to our current innovation ecosystem, the U.S. pharmaceutical industry has been racing against the clock to hasten the development process. Some firms hope to begin clinical trials for drug therapies next month. A vaccine could become available by this time next year.
President Trump is justified in his hopes that drug companies can stop COVID-19 in its tracks — and better position ourselves to fend off future outbreaks. But it’s up to him to make sure they have the necessary resources and incentives to do so.