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December 31, 2018 Price and Costs

On Dec. 18, Sen. Elizabeth Warren, D-Mass., introduced the Affordable Drug Manufacturing Act. The bill would create an Office of Drug Manufacturing to produce and sell generic medications. Warren hopes this government entity would solve "market failures" — her term for generic drug shortages and steep price hikes on off-patent medicines. The plan is absurd. The federal government has no business operating a drug manufacturer. If federal officials want to expand access to generic drugs (a worthy goal) they should harness the power of free markets. Within...

December 17, 2018 Innovation, Price and Costs

Despite the constant barrage of negative news, this is an exciting time for patients. Truly innovative medicines and gene therapies are under development. New gene therapies are particularly exciting because these therapies do not just treat diseases – they often cure them by fixing underlying genetic defects, frequently with only one dose. There is great optimism that these fundamentally new therapies will, ultimately, cure diseases like hemophilia and sickle cell disease, and even many ultra-rare diseases that were previously untreatable. Take...

December 12, 2018 Innovation

Government solutions often come with a price. For the America Invents Act (AIA), this price was an unintended impediment to medical innovation. Proposed legislation known as the Hatch-Waxman Integrity Act can reduce these costs, if Congress takes advantage of the opportunity. The problem of patent trolls plaguing Silicon Valley was a well-documented, and troubling, problem. Patent trolls are entities that obtain patents, often obscure patents, for the sole purpose of filing lawsuits in court. The troll then uses the threat of...

December 11, 2018 Innovation

Sen. Bernie Sanders, I-Vt., and Rep. Ro Khanna, D-Calif., recently proposed bills that would impose price controls on prescription drugs. The legislation would require pharmaceutical companies to sell their medicines in the United States for no more than the median price charged in five countries – Canada, the United Kingdom, France, Germany, and Japan. If companies refuse to cut prices in the United States, the federal government could revoke existing patents or market exclusivities and allow generic drug manufacturers to sell knockoff copies...

December 6, 2018 Innovation

Animal products used in or on humans have been an invaluable part of medical practice for almost a century. Examples include animal insulins to treat diabetes and pig heart valves transplanted into humans. A related medical breakthrough was just published on Dec. 5 in the journal "Nature": Genetically modified pig hearts transplanted into baboons can function long-term, a major step towards the clinical use of pig donor hearts in human patients. But suppose bioethicists objected, on the grounds that such mixing of...

November 19, 2018 Price and Costs

There is no shortage of bad ideas when it comes to the pharmaceutical market. One such proposal would allow drugs to be imported directly from other countries, such as Canada. Then there is the Trump Administration’s proposal that would effectively adopt foreign price controls on Medicare Part B drugs by implementing an international pricing index (IPI). These policies, if implemented, would harm the quality of health care in the U.S. by reducing patients’ access to medicines and harming future innovations. What’s...

November 16, 2018 Price and Costs

Health and Human Services Secretary Alex Azar just released a sweeping proposal that would drastically change how Medicare pays for advanced cancer therapies and other potent medicines. The plan relies on foreign price controls to reduce drug spending by $17 billion over five years. Although drug spending may decline, as the Congressional Budget Office has noted, the plan could result in increased healthcare spending elsewhere, as patients will inevitably lose access to medicines. So while the savings is questionable, the negative...

November 9, 2018 Price and Costs

Last month, the Trump administration proposed several reforms to drive down prescription drug prices. One measure would force pharmaceutical companies to mention the sticker prices of their medicines in television advertisements. The new mandate covers all prescriptions drugs reimbursed by Medicare or Medicaid that cost more than $35 a month. The administration hopes this change will empower patients to choose more affordable drugs and embarrass companies into reducing their prices. But the rule won’t achieve those goals. Instead, it would mislead customers into thinking drug prices are...

November 4, 2018 Innovation

Seasonal outbreaks of the flu cause thousands of deaths even in a good year, and the last flu season, 2017-2018, was a terrible one. It killed 80,000 Americans and sent 900,000 to the hospital, making it the worst influenza season in decades. Data from the Centers for Disease Control and Prevention (CDC), show how much of an outlier it was: Previously, seasonal outbreaks since 2010, had killed between 12,000 and 56,000 and caused between 140,000 and 710,000 hospitalizations. Statistics like that can seem impersonal,...

October 29, 2018 Policy Proposals

Bringing a new drug to market now takes, on average, $2.6 billion and more than 10 years. Those numbers could shrink, and countless patients could benefit, if Food and Drug Administration regulators were less risk-averse. I know that from firsthand experience. Oct. 30 marks the 36th anniversary of the FDA's approval of human insulin synthesized in genetically engineered bacteria, the first product made with "gene splicing" techniques. As the head of the FDA's evaluation team, I had a front-row seat. Although...

October 24, 2018 Policy Proposals

Rarely is there bipartisan agreement that a tax cut won’t cost the federal government money. But, in the case of the medical device tax (a 2.3 percent tax on medical devices and products that was passed as part of the Affordable Care Act) this is true by definition because the tax is already suspended. The tax applies to medical devices such as pacemakers, advanced imaging technology (Cat Scan, MRI and ultrasound equipment), artificial joints, surgical gloves, and dental instruments. Devices that...

October 23, 2018 Price and Costs

This month, the Trump administration proposed a new rule that would require advertisements for prescription drugs covered by Medicare or Medicaid to include the list price of the medicine. To be sure, a free market is dependent on consumers making informed decisions. But this move would provide patients with incomplete, misleading numbers that would muddle their healthcare decisions. Patients almost never pay the full list price for their medication. After a drug is manufactured by a pharmaceutical company, its price and distribution are influenced by...

October 18, 2018 Policy Proposals, Studies

The controversial medical device tax hurts doctors, patients and manufacturers and should be repealed by Congress. The medical device tax imposes a 2.3 percent tax on such common items as pacemakers, CT scan machines, dental instruments, and artificial joints. It is currently suspended. Congress isn’t even collecting the revenue it anticipated, and it has also led to lower investment in research and development in new medical technology....

October 17, 2018 Price and Costs

The largest problems in the health care industry are often created by reformers envisioning themselves as free market saviors, when in reality they are merely advocates for more intrusive government regulations. The Trump administration’s proposal to require that drug advertisements include the medicine’s list price is such an example. On its face, requiring price disclosure appears to promote transparency and free markets. Why shouldn’t consumers know the price of a good before they purchase it? Of course, consumers should. The problem is that,...

October 1, 2018 Policy Proposals

Although best-known for its peace-keeping in areas of conflict — where it enjoys a mixed record, at best — the U.N.'s agencies, programs, commissions and international agreements have a dismal record of accomplishment, especially while acting as the world's regulator-wannabe for all manner of products, processes and activities. The U.N. regularly panders to activists and, not coincidentally, adopts policies that expand its own scope and responsibilities. Science and free market principles routinely get short shrift. U.N. programs and projects inevitably become...

September 4, 2018 Price and Costs

How can you tell if competition is working in a given market? Generally speaking, prices go down while quality goes up. Productivity increases as more efficient methods are discovered. Shortages are rare to nonexistent. And, most important, consumers win. Government intervention, monopolies, and other market distortions can disrupt the normal rules of supply and demand, fostering competition that's actually pernicious to consumers. These distortions are now a major problem in healthcare. With respect to medicines, the problem is that "everybody wins when list...

August 16, 2018 Price and Costs

Pfizer CEO Ian Read recently told investors that he believes pharmaceuticals will soon be sold without rebates. While this change, if it comes to pass, is undoubtedly positive for patients, a question naturally arises: why? After all, rebates and discounts are a normal part of most competitive markets. The problem is that a healthy competitive process does not currently exist in the pharmaceutical market because the current market structure does not effectively account for the interests of patients, who are the...

August 7, 2018 Price and Costs

Through its purchases of durable medical equipment (DME), the Centers for Medicare & Medicaid Services’ (CMS) helps many patients remain in their home and out of hospitals or other long-term care settings. These purchases cover a wide array of medical equipment including diabetes testing strips, wheelchairs, and oxygen tanks. Previously, CMS maintained a set fee schedule to compensate medical equipment suppliers, but this system was widely panned. The critics, including the General Accounting Office (GAO) and the Inspector General of the...

June 5, 2018 Price and Costs

In 2017, there were 46 new novel drug innovations, including new treatments for cancers, Parkinson’s disease, and serious skin infections. These innovations are essential for improving the quality of health care in the U.S. However, innovation is not sufficient. It is equally imperative to promote drug affordability through greater competition. Promoting both innovation and competition requires a careful balance. Thanks to the Hatch-Waxman Act of 1984, the incentives for chemically-based medicines reasonably promote both pharmaceutical innovation and a competitive drug market. Due to...