As we enter a new decade, advances in medicine hold the promise for a brighter future in the battle against deadly diseases like cancer. Advances in immunotherapy and targeted gene therapy, for example, present opportunities not even imagined just few years ago. The challenge for politicians and policy makers is to keep these life-saving advancements coming, while at the same time keeping them affordable for patients.
Getting this balance right is especially important to the large population of Seniors we have in Arizona.
Just 15 years ago a Republican Congress and President modernized Medicare by creating a prescription drug benefit called Medicare Part D. Unlike other parts of Medicare, Part D was designed on the free-market principles of plan competition and senior choice. Recognizing that one size does not fit all, every year Seniors have a choice of a variety of plans who compete vigorously for their business. In order to keep their premiums low and attract Seniors to sign up, plans have a strong incentive to drive a hard bargain with drug manufacturers to keep prices down.
It comes as no surprise to conservatives, that Part D’s free-market model has worked. When the legislation was passed, the Congressional Budget Office estimated both the cost of the program to Medicare and the average monthly premium a Senior would pay, for the first 10 years of the program. The actual results were remarkable.
Medicare spending was 35-40% less than predicted and average monthly premiums projected to be $55 or more in 2016 are in fact only $32.70 in 2020 and that is a slight decrease from 2019. In addition to these financial measure of success, Part D maintains a Senior Satisfaction Rate in excess of 90%, unheard of for most government programs.
Despite this success, big government advocates like Nancy Pelosi want undermine Medicare Part D and its sister program Medicare Advantage, by importing government price controls from socialist countries. What is known as an International Pricing Index (IPI) is included in her signature drug pricing legislation which passed the House of Representatives last December.
President Trump has correctly pointed out that many advanced economies around the world which have socialist health care systems are not paying their fair share of R&D costs for new drugs. They are freeloading on American consumers. But the answer is to stop these unfair trade practices, not import their socialist price fixing to the US!
Socialist health systems hold down cost by rationing drugs. They either wait a long time to make new drugs available to their people, or they are never available. Writing in Forbes in February 2020 author Doug Schoen points out that “roughly 96% of new cancer medicines are made available in the United States, while the 16 countries used in the International Pricing Index only have 55% of new cancer medicines. Further, patients in these 16 countries also receive these medications on average 17 months after release, whereas in the United States, patients have almost immediate access to new cancer medicines following FDA approval”.
These cold statistics translate into patient’s lives. An HIS Markit study published in 2018 “Comparing Health Outcome Due to Drug Access: A Model in Non-Small Cell Lung Cancer,” concludes that half of the gains in life expectancy we have made in fighting lung cancer, the number one cancer killer worldwide, would have been lost if the rationing policies found in Australia, Canada, France, South Korea and the United Kingdom were replicated in the US.”
Government price controls on drugs are not the answer. But neither is doing nothing. Fortunately, Senator Mike Crapo (R-Idaho) and Congressman Greg Walden (R-Oregon 2) have introduced legislation to help.
Their legislation, S. 3129 and H.R. 19, preserve the free-market competition which has worked so well in both Medicare Part D and Medicare Advantage, but directs that more of the savings from negotiations with drug manufacturers flow directly to the consumer at the pharmacy counter in the form of immediate discounts. They also cap the annual out-of-pocket spending Seniors must pay for prescription drugs.
The legislation also takes steps to reduce the freeloading of other developed nations on our R&D and streamlines coordination between the Food and Drug Administration (FDA) and Medicare to insure that new treatment reach Seniors as quickly as possible.
Doctors take an oath, “First, do no harm.” That’s good advice for politicians and policy makers as well. Taking steps to lower drug costs to Seniors is important. But we must do it the right way or we will harm those we are trying to help.