Why price controls won’t work

Sen. Bernie Sanders (D-VT) announced a legislative package designed to control the prices of prescription drugs yesterday—just as BIO’s Council of State Bioscience Associations (CSBA) released a new report showing the problems with this approach.

Yesterday, the Senate Health, Education, Labor and Pensions (HELP) Subcommittee on Primary Health and Retirement Security, chaired by Sen. Sanders, held a two-hour hearing focused on U.S. drug prices and international comparisons.

In addition to drug pricing, the hearing also covered patent thickets, the need for more robust generic and biosimilar markets, and funding for R&D at NIH—and overall, there was considerable criticism of the industry and support for international reference pricing. (Watch the whole thing here.)

The hearing coincided with the reintroduction of three bills to control the prices of drugs:The Prescription Drug Price Relief Act, The Medicare Drug Price Negotiation Act, and The Affordable and Safe Prescription Drug Importation Act.

Notably, The Prescription Drug Price Relief Act would link the prices of prescription drugs in the United States to prices in Canada, the UK, France, Germany, and Japan—similar to what was proposed in H.R. 3 in 2019 and the Trump administration’s “Most Favored Nation” proposal.

So, what if H.R. 3 had been in place between 2009-2019? The CSBA report says:

• A basket of 68 innovative therapies developed by small and emerging biotechs and approved during that time frame would have been reduced to only seven.
• New medicines for some of the most difficult conditions to treat—including in rare diseases, oncology, and neurology—would have been disproportionately impacted.
• Biopharmaceutical industry job losses alone would total nearly 191,000 as U.S. biopharmaceutical industry earnings would drop sharply (a 62% reduction, or $125 billion in 2024 alone).

“If enacted, price setting policies would significantly impede researchers’ ability to bring lifesaving treatments to patients and respond to future health crises,” says Michele Oshman, CSBA Executive Director and BIO VP of External Affairs. “As the last year has made abundantly clear, we cannot afford to short-circuit an industry which offers hope to millions of Americans living with debilitating diseases and directly employs nearly 1.9 million workers across the nation.” 

What kind of drug pricing policy do we need? “CSBA supports patient-oriented solutions that lower out-of-pocket costs for Americans, maintain access to the latest therapies, and fuel the cures of tomorrow. We will continue to engage lawmakers to find policies that achieve these important goals,” added Oshman.

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Today, the House Science Subcommittee on Space and Aeronautics will hold a hearing on R&D pathways to sustainable aviation—a key part of solving the climate crisis. Here’s what BIO has to say. 

“Biofuels produced using biological systems provide a strong and immediate solution to reducing emissions from all forms of transportation, including aviation,” says BIO in a statement submitted for the hearing record.

“The benefits of SAF go beyond reducing greenhouse gas emissions,” BIO continues, citing international research that shows “using biofuels to help power jet engines reduced particle emissions in their exhaust by as much as 50 to 70 percent.” 

BIO recommends measures to support development of SAF, explaining that “to tackle the climate crisis, it is crucial to lead with science and U.S. innovation.” Recommendations include:

• Bolstering funding of U.S. Department of Energy (DOE), U.S. Department of Agriculture (USDA) renewable energy programs, Federal Aviation Administration (FAA), and other government research programs.
• Clearing regulatory pathways: “Uncertainty surrounding the approval of pathways and registration for advanced and cellulosic biofuels are also hindering the development of SAF.”
• Enhancing long-term tax incentives that have enabled the creation of new agricultural supply chains, infrastructure for liquid biofuels, and development of innovative technologies: “New, long-term tax incentives are needed to drive new green energy breakthroughs and enable alternatives to become fully established.”

BIO remains committed to supporting Congress and the Biden administration in its work to address the climate crisis. Among other actions this year, BIO pledged to work with the administration on climate goals and advocated for the role of biotech breakthroughs in addressing the climate crisis before the House Energy and Commerce Subcommittee on Environment and Climate Change. 

But to really solve the climate crisis, we need policy that supports the advancement of biotech breakthroughs like SAF—read more about how policy can help us meet our climate goals.

Learn more about how we can decarbonize transportation.

President Biden’s Wednesday: A day of meetings in the White House capped with an event to mark Equal Pay Day featuring Margaret Purce, Megan Rapinoe, and other members of the U.S. Soccer Women’s National Team. 

What’s Happening on Capitol Hill: Yesterday, the Senate confirmed Dr. Vivek Murthy as U.S. Surgeon General, 57-43. Another busy day ahead, including the expected confirmation of Dr. Rachel Levine as Assistant Secretary of Health and Human Services. The Senate Committee on Environment and Public Works considers Janet Garvin McCabe, the nominee for deputy administrator of the EPA. Treasury Secretary Janet Yellen and Federal Reserve Chair Jerome H. Powell will deliver the quarterly CARES Act Report to the Senate Banking Committee.