The Senate’s proposed plan for drug price controls will harm the U.S. economy, eliminating jobs and revenue, and making America less competitive on the global stage, say recent reports.
The Senate has proposed legislation that would enact price controls on drugs for which Medicare spends the most each year. The bill would regulate 20 drugs annually by 2029, and “the 100 Medicare Part B and D drugs that are likely to be selected for government negotiation from 2026–2031 represent almost half (45%) of all Part B and D drug spending in 2020,” an Avalere analysis says.
The Senate is eyeing the legislation for a vote this week, reports The New York Times.
Drug price controls would eliminate jobs, revenue
The proposed drug price controls would eliminate 592,290 jobs (with an economic impact of $168 billion) by 2031 and reduce drug manufacturer revenue by at least $455 billion by 2032, finds a Vital Transformation analysis published last week. (The study was funded by the Biotechnology Innovation Organization.)
In California alone, we’d lose 111,415 jobs supported by biopharma. The state economy would shrink $33 billion by 2031, says the study.
Why would this occur? Drug makers’ revenues will drop by a projected $450 billion in 2026-2032 under the plan, according to an Avalere analysis. This proposal will affect “pricing and contracting strategies, competitive market dynamics, and patient access,” another Avalere analysis says.
Lost revenue = lost drugs, lost competitiveness
Of 110 drugs approved in 2012-2021, only six would have made it to market under the Senate plan, as only drugs with 50% probability of market entry would be developed, finds Vital Transformation.
This will have a detrimental impact on U.S. economic competitiveness, explains the study. “The Biopharma sector will likely be forced to seek out marketing opportunities and developments in China, where VC is currently investing heavily in biopharma startups,” says Vital Transformation.
The bioscience industry’s total impact on the U.S. economy was $2.6 trillion in 2018, with salaries in the sector averaging above $107,000 annually, nearly twice the national average, a recent BIO analysis shows. That’s why states work to build their bioeconomies.
