This perspective was first shared in our Weekly View e-newsletter, which summarizes the week’s most significant drug pricing news. To subscribe, click here.
In the movie “A Christmas Story,” every time young Ralphie tells an adult that he wants Santa to bring him a Red Ryder BB gun, he’s met immediately with the same, predictable refrain: “You’ll shoot your eye out!”
There’s a very similar cadence every time any new drug-pricing legislation is proposed. The pharmaceutical industry reflexively retorts: “You’ll undermine future innovation!”
Well this week, the terrific new health policy podcast Tradeoffs put the industry talking points to the test:
- Would a law similar to HR3 lead to 8-15 fewer treatments over the next decade (as the Congressional Budget Office projected), or hundreds fewer (as the White House’s Council of Economic Advisors warned)?
- And if there ultimately is a reduction of new drugs coming to market based on some future legislation, would those drugs left on the cutting-room floor be breakthroughs for diseases that currently lack treatments, or would they just be the same sort of me-too drugs that flooded the market following the introduction of Medicare Part D?
- And would indexing US drug prices to what other countries pay strike the right balance between affordability and innovation, or would it simply be a roundabout way to import cost-effectiveness analyses conducted by foreign governments that may not share our own values and budgets? Don’t we have the wherewithal and courage to conduct our own analyses, specifically tailored to improve the US health system?
We understand that investors making risky bets on biopharma R&D need the potential of big financial returns, or else they’ll just divert their investment to a more profitable sector. But at the same time, we believe that value-based drug pricing — where each drug’s price is aligned to how well that drug actually improves patients’ lives — sends the right signal to the drug industry and venture capital firms about the kind of innovation we all want funded. If the US health system can stop overpaying for new drugs that don’t offer much benefit beyond what’s already on the market, we can afford to handsomely reward the new treatments that truly are transforming patients’ lives.
ICER isn’t a blunt tool used to hammer down every drug’s price. No, we want a health system that maintains sufficient incentives for the swing-for-the-fences innovation that can make a real difference for patients. But it’s simply not sustainable to provide those same incentives for any new drug, regardless of efficacy. For the US health system to deliver high-value health care for all Americans, we need to find the right balance. And if you’ve spent any time at ICER’s HQ in Boston, you’ve surely heard our mantra about what that balance needs to look like:
- Fair pricing
- Fair access
- Future innovation
Like a three-legged stool, if any of those legs is removed, the health system becomes unsustainable and topples over. That’s why it’s absolutely critical to foster a balance across all three areas if the system is to deliver the health care that we, as patients, all want and need.