Medicare Negotiation and Competitive Licensing Act will lead to bare medicine cabinets
By Wayne Winegarden
Congress could soon vote on the Medicare Negotiation and Competitive Licensing Act, which would gut America’s intellectual property laws.
The Medicare Negotiation and Competitive Licensing Act would give the government more control over Part D plans. The bill would require government officials to negotiate prices with pharmaceutical companies. If the government couldn’t obtain the price it wanted, the bill would allow the feds to seize a drug company’s patent. The government would then license the patent to another firm, which could manufacture a cheaper generic version.
The bill is terrible news for patients. Medical research spending would dry up without strong patent protections. Americans could lose out on cures for cancer and other deadly chronic conditions.
The proposed law would target patented drugs sold through Medicare’s Part D prescription drug program. Right now, private insurance companies design Part D plans and sell them to seniors. The government provides some regulatory oversight and also subsidizes the plans but doesn’t interfere with insurers’ administrative decisions.
Insurers decide which drugs to include in each plan and how much to charge. Insurers also negotiate directly with drug companies for discounts.
This extortionary behavior would cripple medical research. It takes $2.6 billion to create a single new drug. Only 12 percent of medicines tested in clinical trials ultimately make it to patients.
Patent protections give drug companies a reason to make these risky investments. Patents prevent rival firms from manufacturing a generic until the initial drug has been on the market for a while. This window gives them a chance to recoup their investment.
The United States’ strong patent laws explain why we lead the world in drug development. Research and development investment in the United States spiked to $65.5 billion in 2016. American startups attract three-quarters of the world’s biopharmaceutical venture capital.
Patients are living longer as a result. Since the 1990s, pharmaceutical advancements have contributed to a 26 percent decline in cancer deaths and an 88 percent drop in HIV/AIDS mortality rates.
America’s economy is stronger for it, too. The biopharmaceutical industry supports 4.7 million jobs and adds $1.3 trillion to the economy.
If Congress passes the Medicare Negotiation and Competitive Licensing Act, the government would have free reign to override patent protections. Investors will redirect their dollars to industries with higher profit margins and less uncertainty.
When R&D funding dwindles, so too will patients’ hopes for next-generation cures. The jobs associated with this research will be lost, and the countless patients who might have been cured will be out of luck.
Wayne Winegarden is the senior fellow in business and economics at the Pacific Research Institute and the Principal of Capitol Economic Advisors.
The viewpoints expressed above are those of the author and do not necessarily reflect those of The Independent.
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