Sally Pipes: "Medicare’s Drug-Pricing Proposal Carries A Hidden Cost"

The following is an excerpt from an article by Sally Pipes, Founder & Chair of the Benjamin Rush Institute, published in Forbes. Click here to read the full article in your browser.

The Trump administration says it wants to accelerate medical innovation. Yet one new proposal from the Centers for Medicare and Medicaid Services could do just the opposite.

The agency has proposed a seemingly technical expansion of Medicare’s prescription drug price control scheme, which was created by the Inflation Reduction Act of 2022. CMS wants to treat certain newer medicines as though they were the same product as older ones when determining when they become eligible for government price controls.

That change would have real-world consequences. It would shorten the period companies have to recover investments in improving existing medicines. As the expected return on those investments falls, companies will have less reason to pursue them.

Pharmaceutical innovation rarely ends with a drug’s first approval from the Food and Drug Administration. Researchers routinely spend years finding better ways to use medicines that already work—developing new formulations, improving delivery methods, and discovering new uses for existing therapies.

One analysis found that nearly four in ten novel tablet and capsule medicines were later followed by at least one FDA-approved new formulation.

Those improvements take years of additional research, new clinical trials, another round of FDA review, and substantial financial investment.

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