The American drug industry is coming off an extraordinary success. Five of the world’s leading COVID-19 vaccines were invented in the United States, saving untold lives worldwide and moving us closer to the normalcy we’re all hoping for.
It should be no surprise that the U.S. life sciences sector came to the world’s aid. Two-thirds of all prescription medicines originate in our laboratories. Research conducted in America has yielded breakthroughs in treating everything from cancer to HIV, and now we’re entering the era of cures and precision medicine.
This is no accident. Our laws and market encourage investment, research, and development from companies big and small. That recipe for success, however, is under attack from U.S. lawmakers at almost every turn.
Many of those policymakers have laudable motives. They say they’re trying to make drugs cheaper for patients. While that fits nicely on a bumper sticker, these politicians don’t want to face the facts: our healthcare payer system is broken. They deem reforms to lower out-of-pocket insurance costs or get rid of profit-hungry middlemen too complicated. Instead, they’re pushing an agenda that does little to help patients today and would freeze investment in new drugs — harming the patients of tomorrow.
Several efforts revolve around weakening intellectual property rights. Fundamentally, IP rights grant inventors an exclusive period during which to sell their products, allowing them to recoup investments, and potentially turn a profit before copycats enter the market.
One of the latest attacks on IP rights came in late June, when 100 members of Congress signed a letter to Health and Human Services Secretary Xavier Becerra, urging the administration to pursue one of two dubious legal strategies.
One calls on the government to use “march in” rights. This strategy invokes the 1980 Bayh-Dole Act, which allows universities that receive federal funding to patent resulting discoveries and license them out for development. A Bayh-Dole provision says that such patents can be breached in certain cases — like if a company has failed to commercialize a needed product during a public health emergency.
The letter writers would have the government “march in” on patent rights whenever it deems a drug price too high, which was never the law’s intent.
The other strategy relies on a law known as Section 1498, which allows the federal government to appropriate a patent without the patent holder’s permission, and gives the latter the right to sue for reasonable compensation. But this law was intended for crises such as wartime, not to impose the government’s preferred price.
The legislators’ letter follows another missive in March, in which activist organizations asked the administration to use march-in and Section 1498 to impose price controls on six specific drugs.
In August, President Biden also signed into law a bill installing de-facto price controls, under the guise of “negotiating” lower prices on proven medicines. What the new law overlooks is that roughly nine out of ten drugs fail in development — whose cost must be recouped by the few winners. At the same time, the Biden administration recently set a worrisome precedent by refusing Medicare coverage for a whole class of Alzheimer’s drugs approved under the FDA’s accelerated-approval pathway. These measures show a limited understanding of the life sciences ecosystem and will, as my colleagues put it in Washington last fall, push “drug investment off a cliff.”
Collectively, these policies and proposals amount to an attack on the system that has worked successfully to prevent, treat, and cure thousands of diseases. It costs as much as $2.8 billion to develop a single new drug. Without reliable patents or markets, investors will not take the risk to fund research into a new cancer therapy, Alzheimer’s medication, or drug for any of the 95% of rare diseases with no treatment today. Venture funding for new drugs would disappear, and long-awaited treatments for countless diseases might never materialize.
If policymakers really want to make treatments more widely available, they need to protect the rules and institutions that have made the United States the pharmacy to the world.
John Stanford is the executive director of Incubate, a Washington-based coalition of life-science venture capitalists. This article was originally published by RealClearHealth and made available via RealClearWire.
