May 19, 2023
The Strengthening Medicare and Reducing Taxpayer (SMART) Prices Act introduced by U.S. Senators Amy Klobuchar (D-MN), Peter Welch (D-VT), and 23 other equally misguided members, doubles down on the already dangerous price control provisions of the Inflation Reduction Act (IRA). CASE, and many other stakeholders, have warned that the IRA’s Medicare “negotiation” scheme is just the beginning of a slippery slope of increased government intervention in America’s healthcare system. The so-called “SMART” Prices Act is a dumb policy that would devastate patient access to lifesaving treatments and obliterate the United States’ competitive edge in medical research and development (R&D).
Pharmaceutical companies and private investors risk billions of dollars on R&D to produce potentially lifesaving drugs. For example, the Food and Drug Administration (FDA) just recently approved GSK’s Arexvy,which would be the world’s first respiratory syncytial virus (RSV) vaccine. Seniors could have access to the lifesaving vaccines as soon as this fall. Similarly, between 2000 and 2018, the cancer death rate decreased by 27%, and new cancer treatments have played a significant role in that decline. Without crucial private investment in R&D, Americans wouldn’t have access to these breakthroughs, the latest COVID-19 vaccines, and many other treatments.
Drug development and approval is a rigorous process that enables patients’ access to safe and effective treatments and medicines. The long timeline for development underscores the importance of continued investment in R&D to advance medical science and bring new therapies to patients in need. Government price fixing, however, signals to investors that there may not be a return on investment at the finish line. The IRA made this a dark reality, and the SMART Prices Act could make it much worse.
The SMART Prices Act would allow Medicare to kick off drug price “negotiations” as early as five years after approval, and the bill expands the number of drugs eligible for government price fixing. For example, it increases the number of negotiation-eligible drugs from 10 to 20 by 2027 and to 40 by the following year. This bill directly attacks medical innovation and threatens patients’ access to new treatments and medicine. If senators were looking for options to lower patient costs, they should turn their attention toward the real drivers of high drug prices: insurers and pharmacy benefit managers (PBMs). Instead, they are choosing to continue the radical course set by the IRA.
Promoting free-market principles in medicine generates robust competition and expands treatment options for patients and people with disabilities. Congress’ efforts to inject more government price-setting into the process ultimately harm those reliant on innovative pharmaceutical drugs. Legislators should stand firm against the SMART Prices Act in order to protect the lifesaving innovation that many patients rely on.
