These "rebates" -- which will redirect money from pharmaceutical companies to the federal Treasury -- will effectively impose price controls on a sizeable portion of the Part D benefit. Because they would significantly reduce the industry capital available to finance new research, the chances of a new cure that would sharply alter the cost curve would be significantly diminished. Patients would see fewer breakthrough drugs and therefore a lower quality of life.
The White House also wants to scale back "data exclusivity" protections for advanced biologic medicines. These provisions allow the innovator companies that develop new medical research to exclude competitors from using that research to apply for approval of competing drugs for a specified period of time.
A broad body of research indicates that drug firms need at minimum 12 years of data exclusivity, which is what the law presently provides, for adequate assurance that if a new cure is developed there will be an opportunity to earn a market-return that justifies the investment. President Obama wants to scale back that period to just seven years to allow low-cost copycat drugs to enter the market even sooner, a huge disincentive to innovation
The final piece of the president's misguided drug policy platform would limit the ability of drug companies to craft out-of-court settlements in order to settle patent disputes. Settlements are an essential legal tool for the drug industry. They allow firms to avoid the often costly and extensive litigation process. Restricting the ability of drug firms to reach settlements would force them to redirect scarce resources from research to litigation.
Stopping the coming tsunami of health care costs depends on new cures, especially for Alzheimer’s Disease, that will come not from any federal agency but from private sector pharmaceutical research. It is imperative that government policy at least do no harm to that research, which sadly is a test President Obama’s agenda fails.
Phil Kerpen is president of American Commitment, a columnist on Fox News Opinion, chairman of the Internet Freedom Coalition, and author of the 2011 book Democracy Denied.
American Commitment is dedicated to restoring and protecting America’s core commitment to free markets, economic growth, Constitutionally-limited government, property rights, and individual freedom.
Washingtonian magazine named Mr. Kerpen to their "Guest List" in 2008 and The Hill newspaper named Mr. Kerpen a "Top Grassroots Lobbyist" in 2011.
Mr. Kerpen's op-eds have run in newspapers across the country and he is a frequent radio and television commentator on economic growth issues.
Prior to joining American Commitment, Mr. Kerpen served as vice president for policy at Americans for Prosperity. Mr. Kerpen has also previously worked as an analyst and researcher for the Free Enterprise Fund, the Club for Growth, and the Cato Institute.
A native of Brooklyn, N.Y., Mr. Kerpen currently resides in Washington, D.C. with his wife Joanna and their daughter Lilly.