Proposed Federal Government-Mandated Drug Pricing Policies in the Executive Branch Budget and Senate SMART Prices Act Amount to More Than 235 Fewer FDA Approvals and Up To 14,000 Lost Jobs for Wisconsin Workers Over the Next 10 Years
[Madison, WI] – A new study estimates that there would be more than 235 fewer FDA approvals of new medicines for patients battling cancer, neurological, and rare and infectious diseases over the next decade as well as up to 14,000 lost jobs for Wisconsin workers if proposals to expand federal government-mandated drug pricing policies are implemented. Among the proposals under consideration is allowing Medicare to set prices for specific drugs five years after FDA approval, which would lead to significant lost therapies, innovation, and jobs in the biopharma ecosystem at an even more accelerated pace. These proposals are included in the Executive Branch’s FY 2024 budget as well as the Senate’s SMART Prices Act.
Research firm Vital Transformation modeled the impacts of expanded federal government-mandated drug pricing policies at five years following FDA approval. The study analyzed the reduction of new drug approvals and loss of jobs if these policies or others similar to them were enacted into law.
“At a time when the biopharmaceutical industry is just beginning to experience the negative impacts of the Inflation Reduction Act’s government-mandated drug pricing policy, any new proposal only adds fuel to the fire and reinforces a deeply misguided and flawed approach,” said Tom Kowalski, national co-chair of We Work For Health, a national organization that collaborates with biopharmaceutical research companies, vaccine manufacturers, their employees and local businesses, as well as patient advocacy organizations, to improve the health and well-being of patients. “This latest study demonstrates just how bad the damage could be should these plans be implemented.”
Key Study Highlights:
The study found that, if proposed expansions of government-mandated drug pricing policies are implemented, there are serious consequences around the development of and investment in new medicines, and significant job losses in major innovation hubs like Wisconsin.
- Lost Therapies: More than 80 currently available therapies of 121 identified for price setting – approximately 70% – would likely not have been developed had the pricing provisions been in place prior to their development.
- Lost Innovation: More than 235 fewer FDA approvals of new medicines or new uses over a 10-year period. Impacts of the proposed policies will be felt most heavily in many areas of unmet need, particularly in oncology, neurology, and rare and infectious diseases.
- Lost Jobs & Investment: Loss of 1,900 to 3,000 direct biopharmaceutical industry jobs and a total loss of up to 14,000 jobs in Wisconsin. Loss of ecosystem investments into 50 different therapeutic indications, including $456,500,000 in cancer investments in Wisconsin alone.
The unintended consequences of the price controls passed in the IRA have not been fully realized. The Wisconsin Congressional delegation should withhold any support for similar policies until the consequences of the current law can be fully understood.
Specifically, We Work For Health is hopeful that Congress will preserve incentives for small molecule research. Under the IRA, biologics have a 13-year period before the government can intervene and mandate drug prices, but small molecule drugs are limited to nine years prior to negotiation. This discrepancy will lead to a reduction in investment in small molecule drugs.
Earlier this month, Vital Transformation and the Biotechnology Innovation Organization (BIO) issued a separate study showing that patients could lose access to at least 40% of new medicines that wouldn’t be developed as a result of government-mandated drug pricing policies contained in the Inflation Reduction Act. This equates to as many as 139 therapies not being developed over the next 10 years.
The new study being issued today by We Work For Health and Vital Transformation modeled the impacts on industry revenues, jobs and future research and development investments. The analysis was performed by Vital Transformation’s consulting economist Dr. Harry Bowen, research manager Dr. Daniel Gassull and CEO Duane Schulthess. For the full study, please visit Vital Transformation or We Work For Health.
MEDIA INQUIRIES: media@weworkforhealth.org
About We Work For Health
We Work For Health (WWFH) is a 501(c)4 organization that collaborates with biopharmaceutical research companies, vaccine manufacturers, their employees and local businesses, as well as patient advocacy organizations to improve the health and well-being of patients. The program helps to support policies and initiatives that reinforce the delivery of lifesaving advances in medicine while also promoting the critical importance of jobs and the impact of the biopharmaceutical sector on national, state and local economies.
About Vital Transformation
Vital Transformation understands the implications of new medical procedures, technologies, and policies. We measure their impact on current clinical practices in close collaboration with health care professionals, researchers, and regulators. Through our web platform, client network, and Vital Health Podcast series, we are able to communicate our findings with international decision makers and stakeholders.
