America Should Reward— Not Penalize—Better Medicines

FORBES

Some of medicine’s most consequential breakthroughs occur years after a treatment first reaches patients. Researchers discover that a medicine developed for one disease can also attack another—or that it can be reformulated and administered in a way that is safer, faster and far more convenient.

These advances aren’t accidents. They require enormous investments in scientific research, clinical trials, manufacturing and regulatory approval. Developing a new use or improved formulation can take years of additional work and hundreds of millions—sometimes billions—of dollars.

The U.S. has long led the world in producing these breakthroughs because we reward risk-taking and innovation. Unfortunately, a misguided Biden-era policy now threatens to undermine that uniquely American success.

Joe Biden’s misnamed Inflation Reduction Act (IRA) empowered bureaucrats at the Centers for Medicare & Medicaid Services (CMS) to impose government price controls on certain medicines covered by Medicare. Washington calls this process “negotiation,” but it’s a Tony Soprano-style negotiation. When the government dictates the terms and manufacturers have no realistic way to walk away, that’s price-setting, pure and simple.

The Congressional Budget Office (CBO) and numerous outside experts warned that these controls would discourage investment in new medicines. Those warnings were dismissed, but now the consequences are emerging. One analysis found that investment in small-molecule medicines has declined by as much as 70% since the IRA became law.

The next phase of this program could inflict even more damage.

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