No Class Warfare

  • by: |
  • 09/22/2011

Barak Obama is quickly becoming the anti-innovation President.

 

On Monday, the White House released its deficit reduction plan.  Part of the President’s strategy is to impose new rebates on Medicare drugs, strengthen the Independent Payment Advisory Board, and reduce the exclusivity period for innovator biologic drugs.

 

It’s not class warfare – it’s no-class warfare. And it’s deleterious to the public health.

 

As the Old Perfessor used to say, let’s look at the record.

 

First, on the topic of Medicare rebates, why don’t we just call it what it is – a tax.  More precisely, an excise tax imposed by Uncle Sam on drug sales.

 

But wait, it gets worse. The revenues from this tax don’t lower costs for a single patient.  Not one. The cash would go into the general fund.  It’s not a “rebate” – it’s a tax, plain and simple.  A levy imposed on price.

 

And, hiding behind “deficit reduction,” it’s a tax with a hidden purpose – the introduction of backdoor price controls.  And price controls equal cost controls – with or without IPAB.

 

Speaking of IPAB, the President's plan seeks to lower the threshold at which IPAB would impose Medicare spending cuts; however, the plan doesn't specify what the savings would be. So much for “specifics.” But, specifically speaking, a stronger IPAB further ices the slippery slope towards government price controls and (ultimately) a single payer system.

There’s already the very real risk that IPAB will be insensitive to the needs of Medicare patients. After all, board members are unelected appointees with an incredible amount of power. The IPAB is liable to enact cost-cutting measures that might sound good in the boardroom, but actually lead to worse health outcomes for Medicare patients and strap them with unbearable costs. The President’s proposal makes this twice as bad.

And then there’s the anti-innovation codicil. The President wants to cut innovator biologics exclusivity to seven from the current 12 years.


It’s hugely disappointing that the same man who (as a United States Senator) once said that …

“Realizing the promise of personalized medicine will require continued federal leadership and agency collaboration; expansion and acceleration of genomics research; a capable genomics workforce; incentives to encourage development of genomic tests and therapies; and greater attention to the quality of genetic tests, direct-to-consumer advertising and use of personal genomic information."

 

… is now advocating a policy that would result in precisely the opposite.

 

After speaking (during the State of the Union and a widely quoted op-ed in the Wall Street Journal) about the need for America to embrace innovation – President Obama is trying to make it more difficult, specifically when it comes to the desire to invest in pharmaceutical innovation – a sure bet under no circumstances.

Patent exclusivity funds an innovator company’s research and development efforts. If the President’s proposal becomes law, the US would provide less data protection for innovative biologics than Europe.

12 years of exclusivity also gives hope to those suffering from rare diseases or conditions. If innovator companies think they will have a short time before a follow-on versions of their products hit on the market, they will likely only focus on drugs for major diseases and conditions -- potentially ignoring ailments that are less common, but equally as serious, to those suffering.

What’s next – an executive order instructing the FDA to approve biosimilars without clinical trials?  Alas – this is unfortunately not a far-fetched idea considering the tone and substance of President’s speech on Wednesday. 

If innovation is one of the key answers to our national economic recovery, then the President should abide by what he said, “Our economy is not a zero-sum game. Regulations do have costs; often, as a country, we have to make tough decisions about whether those costs are necessary. But what is clear is that we can strike the right balance. We can make our economy stronger and more competitive, while meeting our fundamental responsibilities to one another.”

 

As Harvard University health economist (and Obama healthcare advisor) David Cutler has noted: "Virtually every study of medical innovation suggests that changes in the nature of medical care over time are clearly worth the cost."

 

L’audace, l’audace, toujours l’audace. This isn’t even the end of the beginning. Let’s keep our eye on the prize.  No, not budget reduction – the real prize: better access to smarter healthcare for all Americans.  Innovation that focuses on creating a chronic healthcare culture that embraces prevention and prophylactic care.  Rather than wasting time on spin, let’s redouble our efforts on innovation.  Then, when we succeed through brainpower and teamwork (and, hopefully some civil bipartisanship), the circus surrounding the President’s deficit reduction proposal will be but a footnote in the history of American healthcare.

CMPI

Center for Medicine in the Public Interest is a nonprofit, non-partisan organization promoting innovative solutions that advance medical progress, reduce health disparities, extend life and make health care more affordable, preventive and patient-centered. CMPI also provides the public, policymakers and the media a reliable source of independent scientific analysis on issues ranging from personalized medicine, food and drug safety, health care reform and comparative effectiveness.

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