Dems v. GOP on New Drugs

by Newt Gingrich: As a leader in the Republican Party for the past 40 years, I’ve been involved in the development of 10 party platforms. Party platforms are important because they are more than a list of policies. Instead, they are a statement of the very different world views that explain those policies.

This year’s Democratic and Republican Party platforms provide a useful example of differing world views on an issue that will dramatically impact the health and well-being of every U.S. citizen: biomedical research.

The GOP platform praises the promise of biomedical research, saying it is “the consequence of marrying significant investment, both public and private, with the world’s best talent.” The Democratic platform says “We recognize the critical importance of a fully funded National Institutes of Health to accelerate the pace of medical progress.”
Notice that the Democratic platform fails to “recognize” the vital importance of private funding. EvaluatePharma estimates the private sector will invest $144 billion this year in biomedical research. That’s more than four times as much as the National Institutes of Health’s $32.3 billion a year in grants and in-house research.

This blind spot in the Democratic Party’s understanding of what it takes to achieve medical breakthroughs explains why their platform can simultaneously call for accelerating the pace of medical progress while proposing destructive policies that would reduce the amount of money available for the research and development of new cures.

The Democrat’s platform calls for de facto price controls in the form of importing prescription drugs from other countries and allowing Medicare to negotiate directly with drug manufacturers. Artificial price control mechanisms like these try to reduce costs today at the expense of continued innovation.

Democrats ignore the fact that while new medicines and treatments may start relatively expensive, they invariably reduce in price over time, increasing their value to society. Meanwhile, the higher revenue generated from the first few years of availability is reinvested into research for the next round of breakthroughs. This is the recurring cycle of innovation that creates lower priced and more effective medications.

Consider statins, a cholesterol-lowering medication. Since statins were introduced in the late 1980s, prices have dropped precipitously. One study published in HealthAffairs in 2012 estimated that the use of statins between 1987 and 2008 generated $1.25 trillion in economic value from the years of life saved for those taking the medicine. During that time about $200 billion was spent on statin drugs, meaning that the use of these medications resulted in a net benefit to society of $947 billion. That is a roughly 4:1 benefit-to-cost ratio.

The Democratic platform also chastises drug companies for the high cost of some new, breakthrough drugs. However, it fails to account for their value relative to their cost.

For instance, while new breakthrough treatments that can cure hepatitis C in a few weeks have large price tags, they save even more money—not to mention suffering—by avoiding the continued hospitalizations and liver treatments associated with the disease. They are also dropping in cost due to competition as more treatments become available. According to Steve Miller, chief medical officer of Express Scripts, the cost of hepatitis C drugs are now lower in the U.S. than in Europe.

Instead of artificial price controls that would reduce medical innovation by choking off the resources needed to develop new cures and treatments, the Republican Party’s platform takes a different approach to lowering drug costs.

It recognizes that it is becoming more expensive each year to bring lifesaving new cures to market. This is because drug developers are unable to take advantage of new technology and up-to-date approaches to doing their research and, especially, their clinical trials. A recent study in the Journal of Health Economics estimated it costs an average of $2.6 billion to bring a FDA-approved medication to market.

Moreover, an analysis published in January 2015 in the Journal of the American Medical Association showed that drug manufacturers have shifted resources from early-stage research to lengthy, expensive clinical trials. This kind of resource shift will lead to fewer breakthroughs and fewer cures.

Biomedical research is one of the few areas where there is little doubt that investment pays for itself. Any policies that reduce resources—public or private—available to invest in research and development are akin to killing the proverbial goose that lays the golden egg. As Bill Gates, the world’s top philanthropist when it comes to delivering medicines to the poor, has said, “The drug companies are turning out miracles, and we need their R&D budgets to stay strong. They need to see the opportunity.”

Of the two parties’ platforms, only the Republican Party recognizes the vital role that private research plays in the development of new drugs, and takes an appropriate approach to lowering the cost of prescription drugs that will preserve the research base necessary for medical innovation. This is an approach that will save lives and save money.
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Newt Gingrich is a former Georgia Congressman and Speaker of the U.S. House. He co-authored and was the chief architect of the "Contract with America" and a major leader in the Republican victory in the 1994 congressional elections. He is noted speaker and writer. The above commentary was shared via Gingrich Productions.

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