The White Home simply introduced that AstraZeneca and Pfizer will begin charging international well being methods the identical costs for all newly launched therapies as they cost right here in America. Bristol-Meyers Squibb and AbbVie have equally promised to cost the identical worth in the UK as in america for 2 soon-to-be-launched therapies.
President Donald Trump deserves a lot of the credit score for these pricing choices. For months, he has been demanding that rich international governments begin paying market costs for medicines, as an alternative of utilizing quite a lot of direct and oblique worth controls to suppress spending on modern medicine — which forces American sufferers, employers and taxpayers to shoulder the lion’s share of the worldwide analysis and growth burden.
The latest bulletins present that drugmakers lastly really feel empowered to withstand international worth controls — assured that the administration may have their backs throughout their upcoming, inevitably contentious pricing battles with European well being bureaucrats unaccustomed to paying American costs for American-invented, usually American-made medicines.
The White Home could be smart to tout wins like these and proceed supporting firms of their efforts to cost market costs overseas for newly launched medicines — all whereas recognizing that firms have restricted flexibility to renegotiate pricing contracts for medicine already in the marketplace.
If administration officers fail to make this distinction — and cap U.S. drug costs on the artificially low ranges set abroad — the outcomes may very well be catastrophic for our collective well being and our financial system.
In a brand new paper, my College of Chicago colleagues and I show that such worth controls on current medicine would cut back biopharmaceutical companies’ U.S. revenues by 49%— resulting in a roughly 48% minimize in worldwide analysis and growth spending. In flip, that may lead to about 500 fewer new drug approvals or indications in a 10-year interval.
Regardless of this immense hurt to public well being and our financial system — the income losses alone are equal to 0.78% of our gross home product, to say nothing of the a lot larger losses in productiveness from elevated sickness, untimely deaths and biotech trade job losses — home worth controls wouldn’t obtain their supposed purpose of ending international free-riding on American innovation.
Particular person American firms don’t have the leverage to repair international free-riding on their very own. However the federal authorities does — which is why it’s crucial for the Trump administration to push different international locations to pay their fair proportion.
He might insist that different developed international locations match the 0.8% per-capita share of GDP that the U.S. spends on modern medicine. That may curb free-riding and inject billions of {dollars} into the drug growth pipeline, benefiting American sufferers, employees and the financial system as a complete.
Tomas J. Philipson is an economist on the College of Chicago and served as a member and performing chairman of the president’s Council of Financial Advisers from 2017 to 2020/Tribune Information Service
