Some drug trips are bad trips, and with this administration, they apparently come in threes.
Bad Trip #1: The Build Back Better Act (BBBA) drug proposals. These proposals retain just enough life to remain spooky. At first, it was just incredibly bad drug policies, characterized by price controls, abusive taxation and reduced innovation. Today, in a stunning act of intellectual midgetism, they have been reinvented as anti-inflationary policy. Eakinomics you kids don’t. Consider this exchange with National Economic Council Director Brian Deese and Margaret Brennan on Confront the Nation this past Sunday:
DEESE: “…the most impactful thing we can do right now is to work with Congress to pass legislation that would lower the costs of the things that families are facing right now-
MARGARET BRENNAN: – Like what now?
DEESE: – like prescription drugs, we could reduce the cost of prescription drugs by allowing Medicare to negotiate better prices that would actually reduce federal spending, and that would reduce the cost that people pay. »
My dictionary defines inflation as “a persistent and general price level » [emphasis added]. From a conceptual point of view, it is quite difficult to go from the “general” level of prices to a specific market, such as that of pharmaceutical products. In practice, it is quite the assertion that 100% of the consumer price index (CPI) inflation problem will be solved by policy directed at the 1.392% CPI represented by prescription drugs. If you buy this, I have land in Florida….
The BBBA’s drug proposals are not good drug policy and are not anti-inflationary policy at all.
Bad Trip #2: TRIPS waiver. Yes, indeed, a journey that is TRIPS (Trade-Related Aspects of Intellectual Property Rights). It is a bit of a trip through the looking glass because the TRIPS Agreement was agreed upon by the World Trade Organization to protect the property rights of those involved in international trade. So recent occasion ministers have come together for the express purpose of weakening those same protections for COVID-19 vaccines.
The extent of their weakening is up for debate (Spoiler Alert: AAF’s Tom Lee will weigh in on this in the near future), with The Wall Street Journal summing up as follows: “The measure is much less ambitious than the original proposal made by India and South Africa in October 2020 to alleviate severe vaccine shortages in developing countries. They had asked for broader intellectual property waivers, including on vaccines, treatments and tests….”
But the bottom line is that this administration (and its predecessor) sought to undermine the very incentives for innovation that had delivered the most successful COVID-19 vaccines. And why? It’s 2022 and there’s a global glut of vaccines. All the administration has accomplished is set a bad precedent without putting another vaccine in another arm. Tremendous.
A TRIPS waiver is enough to shake your confidence.
Bad trip #3: The Centers for Medicare and Medicaid Services (CMS) Aduhelm Decision. Recall that Aduhelm is the treatment for Alzheimer’s disease approved by the Food and Drug Administration (FDA). After its approval, CMS increased the monthly Medicare Part B premium to $21.60, the largest dollar increase in its history. About $11 of the premium increase was advertised as a “contingency reserve” to cover the costs of the new Alzheimer’s drug.
CMS then refused regular Aduhelm reimbursement, instead requiring one to be enrolled in a clinical trial to obtain coverage. This set a precedent that there could be two gatekeepers to advanced therapies – the FDA and the CMS – and that the latter could undermine the return to a risky, long-term research enterprise.
As with bad TRIPS (above), there is some debate about the overall harmfulness of this (the chaotic FDA approval process did no one any favors), but it is definitely directional negative. And best of all, CMS did not mitigate the premium increase!
The Aduhelm decision is one of the political moments that CMS probably hopes people forget.
What’s a good drug trip? Perhaps in the next Congress, a new leadership will take up the bipartisan proposals to redesign Part D. Good policy, good policy and do something about drug prices. It would be a good trip.