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Proposals to let decisions by other countries control American drug prices are illegal, would reduce the availability of innovative new treatments, and fail to help Medicare beneficiaries with their out-of-pocket costs, according to the Biotechnology Innovation Organization (BIO).
Two models proposed by the Center for Medicare and Medicaid Innovation (CMMI) also threaten America’s biotech industry and Americans’ ability to obtain medicine, BIO explains in written comments.
“International reference pricing risks ending the U.S.’s global leadership in biotechnology, at a time when such leadership is already under real threat from China,” BIO warns. “Most important, patient access is at stake. Experience in many European systems shows that aggressive price controls can be accompanied by delayed launches or decisions not to launch at all.”
BIO’s written submissions are a response to CMMI’s call for comments on models that would require biopharmaceutical companies to pay substantial new rebates to Medicare based on most favored nation (MFN) prices—the amount charged for drugs in other developed countries. Guarding U.S. Medicare Against Rising Drug Costs (GUARD) would require these new rebates for drugs covered by Medicare Part D, and Global Benchmark for Efficient (GLOBE) Drug Pricing would require them for Medicare Part B drugs.
BIO’s two sets of comments, sent Feb. 23, give detailed reasons for opposing the GUARD and GLOBE models.
Exceeding legal authority
Both models would violate “numerous core constitutional and legal principles, including ‘major questions’ doctrine, appropriations law, principles of the Presentment, Due Process, and Takings clauses, separation of powers and nondelegation doctrine, and Congress’s enumerated powers over foreign commerce and patents,” BIO explains.
Both models also attempt to rewrite the Centers for Medicare and Medicaid Services (CMS )’s statutory authority, “which is restricted to genuine, limited tests of payment and service delivery innovations, in order to invent a new mandatory, nationwide, punitive price-setting framework based on activities that take place entirely outside the U.S.”
Allowing other countries to dictate U.S. pricing policies would “bring to the U.S. all of the well-known negative consequences that such pricing policies have had in other nations: reduced incentives for innovation and slower, narrower access to new treatments,” according to BIO.
Harming patients and biotech
Aside from being illegal, the models do not help Medicare beneficiaries with the out-of-pocket costs imposed on them by plans, “and in fact, CMS anticipates that GUARD could indirectly lead to increased rather than decreased out-of-pocket costs for seniors on Medicare,” BIO says.
Furthermore, the models would “not help patients with the access concerns that directly impact and matter to them, namely, harsh benefit management policies (e.g., prior authorization, step therapy, and restrictive formulary schemes) and high plan cost sharing requirements.”
BIO cites a Harvard article showing international reference pricing policies erode the incentives to prioritize U.S. distribution or invest in breakthrough therapies. “Over time, this may delay medical advances, especially for high-risk or low-demand treatments,” the article confirms.
The uncertainty for investment returns created by the GLOBE and GUARD models would be “especially damaging to the uniquely dynamic American ecosystem of small- and medium-size firms that serve as the discovery engine for new medicines, including medicines to treat rare diseases,” according to BIO.
The models would create new challenges for the entire biotech industry, and harm some types of research more than others, the comments explain: “This dynamic is especially problematic for rare disease therapies and complex therapies, where small patient populations, high development costs, and complex manufacturing already make investments in such areas especially risky.”
Real solutions
When it comes to addressing drug prices, BIO highlights other areas where policy can make a difference, including continuing efforts to reform the system of pharmacy benefit managers (PBMs), middlemen who use their market dominance to profit by driving up drug prices.
Another solution BIO mentions is “to ensure the billions of dollars in discounts manufacturers offer under the 340B program translate to lower out-of-pocket costs for patients—the program’s true intended beneficiaries.”
BIO says it stands ready to assist in developing these improvements, which “would help fulfill the Trump Administration’s goals of supporting American innovation, improving patient access, and improving Americans’ health.”
Read BIO’s full comments on the GLOBE and GUARD models.
Read more from BIO on MFN: Simplify the System.
