Commentary: Delaware Medicare patients at risk from proposed program revisions

By John Gardner

The way Medicare currently pays for the prescription drugs beneficiaries need is being challenged by a bill that, in the sole interest of cutting government’s costs, would make it more difficult for patients to access medications and diminish investments in new drug research.

This pet bill of House Speaker Nancy Pelosi, H.R. 3 would force Medicare, as well as private plans, to abandon the present drug pricing system. Instead, prices would be fixed and based on the costs charged in a select group of foreign health care systems that are government controlled.

The prices set by those nations have no basis in either the cost of development and production, or what consumers actually pay for them.

Implementing this change would have two significant negative impacts on patients.

First, below market pricing would discourage the availability of many physician-prescribed drugs and therapies, just as it does in foreign nations with state-run systems.

In Australia, one of the countries Speaker Pelosi proposes we emulate, only 36 percent of new drugs are available to doctors and patients. In the U.S., we can utilize 90 percent of them. Other targeted nations are not much better. For instance, Japan has access to only 51 percent of available new drugs and in the UK, arguably the highest performing reference country system, they only have access to 59 percent.

Secondly, reference pricing would dissuade investment in biopharmaceutical research and development, slowing the flow of new drugs in the pipeline for patients hoping for a cure. This was confirmed by the nonpartisan Congressional Budget Office, which estimated that just one part of H.R. 3 would reduce revenues that could be spent on new drug development by as much as $1 trillion over 10 years, causing the loss of up to 15 new drugs that might otherwise have been available.

Biopharmaceutical companies already operate in a high-cost business. Johns Hopkins reports developing a new drug now costs $2 to $3 billion. Implementing changes that undercut incentives to invest in R&D initiatives will make it even more difficult for private sector companies to justify the expense of drug innovation and clinical trials, harming the patients who need them most.

But H.R. 3 is not the only threat to Medicare beneficiaries. The Senate Finance Committee is also considering Medicare cost-cutting strategies that would produce more benefits for the government and insurers than they would for patients.

The Senate’s Prescription Drug Pricing Reduction Act of 2019 fails to include changes that directly reduce out-of-pocket costs for patients, while shrinking potential drug innovation investments by more than $100 billion.

AIDS Delaware worked with more than 2,300 Delaware residents last year, including hundreds of older adults and their caregivers. We know firsthand that Medicare health care coverage is an essential support for these seniors, as it is for the many other Delawareans with serious medical conditions. Any program changes endorsed by Congress should put patients first and ensure access to any and all drugs their doctors prescribe.

Neither H.R. 3 nor the Prescription Drug Pricing Reduction Act of 2019 meet this standard and both should be discarded.

John Gardner, of Wilmington, is executive director of AIDS Delaware.