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CLSA Wire

Sen. Kamala Harris is Latest to Endorse Dangerous International Price Controls Concept to Lower Drug Costs

By Molly Fishman & Dani Mitchell
July 23, 2019

On July 16, Senator Kamala Harris (D-CA) released a plan proposing international price controls as part of her solution to lower drug costs. This latest action demonstrates growing bipartisan interest in using the dangerous concept of price controls as a mechanism for lowering list prices for pharmaceuticals in the U.S.

Last fall, the Trump Administration unveiled a controversial Advanced Notice of Proposed Rulemaking (ANPRM) to reduce Medicare Part B costs by adopting foreign price controls. The Administration received nearly 4,000 responses to its draft proposal, many concerned about the impact it would have on access, innovation, and the supply chain. Despite this feedback, the Administration is moving forward with the concept, and a Notice of Proposed Rulemaking (NPRM) is now under internal review at the Office of Management and Budget (OMB) and anticipated for release this summer. The NPRM will likely include price controls via the establishment of a new International Pricing Index (IPI) Model in which the Centers for Medicare and Medicaid Services (CMS) would link the costs of many drugs to prices in 14 other countries.

Senator Harris’ plan directs the U.S. Department of Health and Human Services (HHS) to set a “fair price” if a prescription drug is sold for less money in “any comparable Organization for Economic Co-operation and Development (OECD) country,” or if its annual price increase exceeds the inflation rate. Harris’ plan goes further than the Administration’s by requiring a 100% tax rate on company profits from drugs that exceed the “fair price”.

In addition to, or to complement the formal rule making process, President Trump is also expected to soon issue an Executive Order mandating a “favored nations” policy in which U.S. payments for drugs are capped at the lowest price paid by either a manufacturer or a developed country.

CLSA is deeply concerned about any proposal to transform Medicare Part B from a market-based payment formula to one based on artificially low and government-controlled foreign prices. Such plans largely ignore their impact on patient access, the development of new cures, and their threat to innovation. CLSA is actively engaging the Administration, Congress, national industry and trade association groups, our multi-state life sciences association partners, patient and provider groups, small and emerging business and manufacturing groups, and academia and the venture community to develop and coordinate the expression our deep concerns and opposition to these proposals.

Example of Digital Ads Regarding IPI

CLSA has also developed an aggressive and comprehensive strategic plan to organize our activities in opposition to the concept of price controls. Our activities to date include: submitting detailed comments in response to the ANPRM, joining 338 other stakeholders on a letter to bipartisan House & Senate leadership, and initiating a grassroots advocacy campaign to encourage constituents to weigh in with their legislators in opposition to the proposal. Please please join us in urging Congress to reject foreign price controls and defend patient access in Medicare Part B.

Questions? Please contact Molly Fishman, CLSA’s Director of Federal Government Relations (mfishman@califesciences.org).