GIPC Report Shows Negative Impacts of Drug Pricing Controls on Patient Access to Treatments

Today, the U.S. Chamber of Commerce’s Global Innovation Policy Center (GIPC) published a Patient Access Report profiling the many ways in which drug pricing controls, often enacted in the name of ensuring widespread access to low-cost medicines, actually result in less access to innovative medicines that are more widely available in free markets. The GIPC’s report comes at a time during which the Biden Administration has taken recent action on drug pricing provisions included in the Inflation Reduction Act passed into law last August, which could have deleterious effects on patient access in the United States.

Governments Pursue Drug Pricing Controls Despite Industry’s Incredible Response to COVID-19

This report provides an update to the GIPC’s first Patient Access Report, published in 2019, with a particular focus on the drug pricing and access regulation benchmarks composing about one-quarter of the original 2019 study. According to the GIPC, these metrics are “dedicated to measuring the extent to which national biopharmaceutical regulations, including pricing and reimbursement (P&R) policies, limit access to a domestic market and provide preferences for local producers.”

The costs of new drug development remain expensive, as about only one in 10,000 researched compounds results in a marketable drug. However, as the introduction to the GIPC report notes, the existing pharmaceutical R&D system responded to the COVID-19 pandemic with breathtaking speed. “These technologies and products are the fruits of a preexisting innovation ecosystem that is centered on IP rights, which provide innovators with an opportunity to earn a return on investment and establish a vehicle for knowledge-related commercial transactions,” the report states. While the report focuses mainly on the impacts of drug pricing controls implemented by national governments, it also makes clear that an innovation framework within which pharmaceutical R&D is supported by private patent rights without government pricing intervention results in the best environment for patient access to new treatments.

The updated drug pricing and access regulation scores for nine high-income Organisation for Economic Co-operation and Development (OECD) nations shows that the United States holds a wide lead over other OECD countries covered by the survey in terms of patient access to innovative, life-saving pharmaceuticals. The GIPC report makes clear that the lack of drug pricing controls in the U.S., up to the passage of the Inflation Reduction Act, has supported an environment of widespread access to treatments. Among the report’s key findings is that drug pricing controls lead to fewer overall biopharmaceutical product launches, fewer biologic launches and fewer oncology product launches in countries implementing such controls. Further, drug regulations that delay government reimbursements tend to increase the time it takes for patients to access new treatments even when they have launched within their country; in many cases, that delay can last for more than one year.

Fewer Biologics and Oncology Products Launched in Countries With Strict Price Controls

Comparing the recent drug pricing benchmarks to GIPC’s 2019 scores shows that the environment for patient access has stayed the same or become worse in seven of the nine OECD nations making up the survey. While both France and Italy improved their scores, both nations increased their pricing and access regulation scores under the GIPC’s metrics by only one percentage point to 63.94% and 57.69%, respectively. Significant score reductions were seen in Japan, which has implemented a new health technology assessment system as part of its national P&R process, and Canada, where regulators have introduced new cost reduction reforms into the nation’s Patented Medicine Prices Review Board’s evaluation methodology.

While increased economic globalization and regulatory harmonization have improved global access to pharmaceutical supply chains, data collected by GIPC from consultant firm IQVIA shows that strict drug pricing controls cause fewer pharmaceutical products to be introduced into the countries implementing those controls. This conclusion was underscored by the low percentage of new pharmaceutical products launched in both South Korea and Australia, two high-income nations within the OECD that have introduced very strict drug pricing regulations. Between 2000 and 2019, only 56% of new active substances were launched in South Korea, whereas only 47% of new active substances were launched during that time period in Australia.

Similar results were seen when looking at the impacts of price controls on the number of new biologic active substances and new oncology active substances launched in those two countries between 2000 and 2019. South Korea and Australia again rank as the two lowest nations in the GIPC survey, with Australia in particular experiencing a low rate of new biologics (38%) and new oncology products (41%). By contrast, the United States, which had not introduced major drug pricing controls until the passage of the Inflation Reduction Act, saw about 90% of all new product launches across the three categories tracked by the GIPC report.

Biden Administration Actions Will Be Reflected in Late 2023 Update to GIPC Report

Considerable delays between product launches and inclusion of those products in government reimbursement programs are another consequence of strict P&R regimes that create patient access problems. Such delays ranged from 133 days in Germany up to around 500 days, or nearly 1.5 years, in France and Spain. The GIPC report cites further data from Innovative Medicines Canada showing that the average time from market authorization to reimbursement for new pharmaceutical products in Canada had climbed as high as 632 days, or nearly 1.75 years.

The GIPC report concludes that, while the United States has held a lead position among high-income OECD countries in terms of patient access to innovative medicines, the pricing controls embedded into the Inflation Reduction Act will negatively impact patient access in this country. In order to assess the impact that these pricing controls will have on American patients, the GIPC plans to publish another update to the Patient Access Report drug pricing benchmarks by the end of 2023.

In a press release issued with the report, Tom Quaadman, Executive Vice President at the U.S. Chamber of Commerce, said: “For decades, the United States has led the world in both development of, and access to, innovative medicines—today, that leadership is at risk. Sadly, policies like the price-setting mechanisms in the?Inflation Reduction Act?(IRA) could lead to less groundbreaking treatments and rationing of lifesaving medicines for American patients.”

Actions taken this spring by the Biden Administration to implement these new drug pricing controls could provide ample support for the GIPC’s thesis that strict pricing controls hamper patient access to treatments. This January, the U.S. Department of Health and Human Services (HHS) announced key dates for the implementation of a new Medicare negotiation program, enabling HHS Secretary Xavier Becerra to negotiate the price of certain high-cost drugs for Medicare programs directly with drug manufacturers. Then, in mid-March, HHS and the Centers for Medicare & Medicaid Services announced that the new inflation rebate program would make additional savings available to Medicare Part B beneficiaries for a series of 27 drugs approved for use in the program.

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