Deregulation Is The Pathway To Greater Pharmaceutical Innovation

The White House
Surveys confirm that most Americans recognize the value of prescription drugs. But the same surveys also show that Americans are worried that they will be unable to afford needed medicines.
These conflicting feelings exemplify the inherent tension when it comes to prescription drugs – how do we incentivize innovation to help patients who lack efficacious treatments while also promoting greater affordability for medicines today?
Too often, proposals get this balance between innovation and affordability wrong.
Policies such as the Medicare price negotiations mandated by the Inflation Reduction Act (IRA), and signed into law by former President Biden in August 2022, essentially impose price controls on targeted medicines. Unless repealed by Congress, price controls on the first 10 drugs under Medicare Part D will go into effect on January 1, 2026. Additional new drugs under Parts D and B will be subject to controls in subsequent years. Price controls improve affordability but only by reducing the incentive for continued innovation. Consequently, these controls exacerbate the tension between patients who have access to safe and efficacious medicines and patients living with untreated or poorly treated conditions.
Unlike price controls, there are many potential regulatory changes that will improve drug affordability without diminishing the hope of patients who are waiting for an effective treatment to be developed. An Executive Order (EO) signed on April 15th is a solid first step toward achieving this goal.
While the EO contains some regrettable changes, the EO addresses the root causes of the current affordability problems and improves the incentives to develop new innovative treatments. As a result, the EO’s beneficial changes would meaningfully address many of the problems plaguing the pharmaceutical industry.