The debate over how to lower medication costs while maintaining access for patients is a pressing concern for American policymakers. While efforts to reduce prices are commendable, they must be approached with caution. A particularly concerning proposal is the adoption of foreign reference pricing - a practice where U.S. drug prices are tied to those set by foreign governments - posing significant risks to both patient access and medical innovation in the United States.
Foreign reference pricing is based on flawed healthcare systems of other nations, which often result in delayed treatment for patients and stifle innovation. This approach imports failed models rather than encouraging competition and investment that has driven the U.S. biopharmaceutical sector to lead the world in life sciences. By pegging U.S. prices to bureaucratic decisions made abroad, foreign reference pricing threatens to undermine the very engine of medical progress that has brought life-saving treatments to millions of Americans.
The U.S. Chamber of Commerce has consistently championed free-market principles and strong intellectual property protections to ensure equitable access to medicines while fostering a robust innovation ecosystem. However, evidence from other countries reveals that price controls - whether through "negotiation" programs or reference pricing schemes - have detrimental effects on patient access and the development of new treatments. Importing these practices would bring not only shorter lives but also slower progress in treating conditions like cancer, diabetes, and rare diseases.
Price Controls Delay Patient Access
The Chamber’s research highlights the grim consequences of price controls on patient access. In countries that have implemented such measures, patients face significantly longer wait times for new treatments. For example, while 80% of new oncology products are launched in the U.S., only 58% are available in Europe, where price controls are prevalent. In Germany, patients may wait an average of 133 days for access to innovative medicines, while those in Spain face delays of up to 500 days. These delays are not just statistics, they represent real people waiting for life-saving therapies - some of whom may never receive treatment in time.
The Biden Administration’s "negotiation program" for medications has already set a concerning precedent by introducing government intervention into the free market. This approach risks stifling innovation, as research indicates that importing foreign reference pricing could lead to a dramatic decline in U.S. clinical trial activity. Private sector research funding might drop by up to 75%, with a disproportionate impact on cancer and chronic disease treatments. Without incentives, companies may abandon investment in groundbreaking therapies for rare diseases, leaving patients with few options.
The Impact on Innovation and Rare Diseases
The consequences of price controls are particularly severe for conditions like rare diseases and orphan cures. These often-overlooked conditions rely heavily on the free market’s ability to attract investment through potential returns. Price controls would diminish these incentives, potentially halting progress in treating rare genetic disorders or tropical diseases with limited prevalence. Without the promise of a return on investment, companies may abandon vital research and development efforts, leaving millions without access to life-saving treatments.
A Call for Market-Based Solutions
The Chamber’s position is clear: while lowering medication costs is a laudable goal, it must be achieved through market-based principles that respect free enterprise and encourage innovation. A competitive and robust healthcare marketplace is the best way to ensure affordable and effective treatments for all Americans.
Policymakers should reject price controls and foreign reference pricing, which pose significant risks to patient access and medical progress. Instead, they should focus on solutions that leverage U.S.-based innovation and global trade agreements. By fostering strategic collaborations with trusted partners and enforcing existing trade deals, the United States can maintain its leadership in biopharmaceuticals while ensuring continued access to life-saving treatments.
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