[Ip-health] Ed Silverman: Dear President Trump: Your big idea on drug pricing is half-baked

Ruth Lopert ruth.lopert at gmail.com
Tue Feb 7 06:06:14 PST 2017

Not at all in Australia, but not for lack of trying


On Tue, Feb 7, 2017 at 8:58 AM, Jamie Love <james.love at keionline.org> wrote:
> This is Ed Silverman's take on Trump wanting to make other countries pay
> more for drugs.
> (While Ed correctly notes it is hard to get foreign governments to agree to
> pay more for drugs, it is worth noting that Presidents HW Bush, Clinton, GW
> Bush and Obama have all sought to do this, in various ways, with partial
> success, particularly in developing countries, and less so in higher income
> countries).
> https://www.statnews.com/pharmalot/2017/02/06/trump-open-letter-drug-pricing/
> Dear President Trump: Your big idea on drug pricing is half-baked
> By ED SILVERMAN @Pharmalot
> FEBRUARY 6, 2017
> Dear President Trump,
> When you met with several pharma executives last week, you complained about
> “astronomical” drug prices and promised to cut regulations so medicines
> could be approved faster.
> That’s standard campaign fare. But one remark was particularly curious —
> you accused foreign governments of “freeloading” by imposing price controls
> on medicines, which cut drug makers’ profits and, as a result, make it more
> difficult to finance research and development. You promised, without
> specifics, to use trade policies so that foreign countries would pay their
> “fair share.”
> Let’s be blunt: Your idea is half-baked. Why? Because it is much more
> complicated than you think.
> Unlike the United States, most other countries provide some form of
> insurance coverage for their populations and take responsibility for
> negotiating drug prices. Government agencies around the world have been
> pushing back against drug makers over the rising cost of medicines, a
> development that has proven not only popular with voters, but increasingly
> necessary given strained budgets.
> Some Americans, however, grumble that they are, in effect, subsidizing
> other countries. That may be true, but the US has failed to take any
> significant steps to lower prices. And while you profess a desire to tackle
> this issue — and play to your populist base — you have sent mixed messages
> about allowing Medicare to negotiate. And you have only paid lip service to
> the idea of allowing drugs to be imported.
> Perhaps this is because you have realized that the Republicans controlling
> Congress are unlikely to back proposals that would upset brand-name drug
> makers, who are big campaign contributors. Of course, you’re full of
> surprises and may yet take action. But using strong-arm tactics — in the
> form of trade deals that force other countries to pay more for medicines —
> must seem like an easier fix.
> Well, good luck. Other governments are unlikely to acquiesce so easily.
> “Expecting other countries to pay their fair share is patently absurd,”
> said Kurt Kessler of the ZS Associates pharmaceutical consulting firm. “It
> could quickly turn into a backlash against the US. Imagine the reaction
> from other governments: ‘You’re going to beat us with a stick and make us
> pay more for something, when our system already works well, so that it’s
> easier for Americans to pay less?’” said Kessler, who is based in
> Switzerland and specializes in global marketing strategies.
> Just spin a globe and you can find any number of battles currently underway
> over pricing — in countries that are well off, and some that are less so.
> In Ireland, health authorities are fighting Vertex Pharmaceuticals over the
> price of a cystic fibrosis drug. The Canadian government is in court
> calculating restitution won from Alexion Pharmaceuticals for overcharging
> for a rare disease treatment. The Colombian health minister unilaterally
> cut the price of a Novartis drug after bitter negotiations failed. And the
> Chilean congress asked the president to establish procedures for
> sidestepping patents on medicines so that lower-cost versions could be
> produced.
> The US is unlikely to be able to use trade agreements as leverage to raise
> prices abroad. Such pacts often require countries to protect drug makers’
> patent rights. But they are not obligated to buy those drugs or to
> guarantee certain pricing in public hospitals, for instance. And under a
> World Trade Organization agreement, countries have the right to take the
> approach being pursued by Chile to create low-cost alternatives to pricey
> brand-name drugs.
> There may be some routes open to you, however. Perhaps your team could
> pursue trade deals that eliminate reference pricing, which is when a
> government evaluates the effectiveness of different drugs used for treating
> the same disease and sets reimbursement based on the least expensive
> choice. Or you could restrict the use of formularies, which are lists of
> drugs that receive certain coverage.
> “Any smart country would fight back, though, because they’re at the mercy
> of [pharmaceutical] monopolies,” said Brook Baker, a professor at
> Northeastern University School of Law and a senior policy analyst for
> Health GAP, a group that advocates for wider access to medicines. “It’s not
> that these countries are getting a free ride. What you see is a willingness
> to tame the excesses of a free market.”
> There is another point worth noting.
> Even if other countries began paying more for medicines, there is nothing
> to say this would result in greater research or more jobs in the US. Maybe
> drug makers would use the extra revenue for more research. That would be
> nice. But they could just as easily raise shareholder dividends or divert
> some of the money to more heavily promote their medicines. Most likely, it
> would be all of the above.
> Meanwhile, though, you risk souring relations with some countries over a
> pocketbook issue that resonates widely no matter where you look. And it
> will do nothing to solve the affordability problem confronting many
> Americans.
> So before you complain too much about others not paying their fair share,
> perhaps you should sort out how Americans can pay a reasonable share for
> medicines, too.
> --
> James Love.  Knowledge Ecology International
> http://www.keionline.org/donate.html
> KEI DC tel: +1.202.332.2670, US Mobile: +1.202.361.3040, Geneva Mobile:
> +41.76.413.6584, twitter.com/jamie_love
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