Heading into an election year, President Trump wants a win on healthcare.
Reports that he berated Health and Human Services Secretary Alex Azar over polling showing that the public prefers Democrats on healthcare, have raised new fears that the administration will revive its stalled International Pricing Index proposal. This price control scheme would spell disaster for patients and the world’s most innovative drug market.
Democratic presidential candidates are competing to see who can come up with the most unrealistic healthcare plan. While the polling that set off the president may indicate the public puts more faith in Democrats, he should dig deeper into the data.
Democrats’ key plan — Medicare for All — generally polls well up until the public discovers what it entails. Once respondents learn that it would eliminate private plans, raise taxes and delay certain treatments — facts they’ll hear more often during the general election campaign — support craters. And even without that information, voters in key battleground states like Michigan, Pennsylvania and Wisconsin are skeptical of Medicare for All.
There’s no good political reason, in other words, for Trump to race to the left of Democrats on healthcare. Nor is there a policy case.
The International Pricing Index would set Medicare Part B drug payments according to prices seen in 14 other countries. Many of them have socialized healthcare systems that impose price controls and, as a consequence, have reduced access to the most innovative and life-saving drugs.
In the HHS press release that accompanied unveiling of its American Patients First plan, the administration cited “foreign governments free-riding off of American investment in innovation” as one of the heath care system’s four major challenges.
They make a good point. By imposing price controls, other nations leave the financial burden of financing research and development of new drugs on the shoulders of American consumers. That’s not right. But leaving no one to finance innovation is a poor solution that we’d regret in the long run.
One analysis reported that if the United States used drug pricing mechanisms similar to that used by Australia, Canada, France, South Korea and the United Kingdom (three of which are included in the proposed International Pricing Index), then for U.S. patients diagnosed with certain types of cancer, “aggregate survival gains (i.e., gains in life years) due to innovative medicines would have been cut in half.”
Americans shouldn’t need to sacrifice their world-class medications to achieve affordability.
Rather than following the rest of the world down the path of price controls, we should work to remove the government-imposed distortions that hinder competition and keep prices high. This means increasing access to generics and biosimilars, and breaking free of the third-party payer system — where neither doctors nor patients examine and compare costs of treatment options so long as they are insured — so that drug companies are forced to compete for market share more like any other business: by lowering prices.
The International Pricing Index represents an outsourcing of policymaking to foreign jurisdictions, many of which don’t believe in capitalism if they’re not outright socialist. There are better alternatives to lowering drug prices that are consistent with American principle of free markets, and which won’t do irreparable harm to the nation’s innovative drug market.
Trump should focus on those approaches that show faith in the voting public to reject unrealistic schemes instead of competing with Democrats to offer the emptiest healthcare promises.