Feb 20, 2019 - 1:00pm

Quick Take: Your Primer on HHS’s International Pricing Index (IPI) Proposal

Fill me in:

The Department of Health and Human Services (HHS) has proposed a new policy – known as the International Pricing Index (IPI) – ­­that would set certain drug prices based on an international benchmark. As proposed, the rule would affect many life-saving drugs administered to patients in hospitals and doctor’s offices under what’s known as Medicare Part B.

Prices for those medicines would be benchmarked to government-set prices in countries such as Austria, Ireland, Greece, Czech Republic and a dozen others.

Why does it matter:

Health department officials say this proposal will lower costs. In practice, however, it would essentially import other countries’ price controls into our nation’s health care system. This will reduce American seniors’ access to life-saving drugs, inhibit innovation, and ultimately threaten our nation’s free-market health care system.

Research has shown that countries like those referenced in the IPI proposal have access to fewer new drugs and a fraction of the cures that Americans do. Groups like the American Cancer Society Cancer Action Network, for example, fear the plan“could actually make it harder for cancer patients, especially those living in rural areas, to find the right provider to treat their cancer with the right drug.”

The Trump administration made the following argument against price controls in 2018: “Such price controls, combined with the threat of market lockout or intellectual property infringement, prevent drug companies from charging market rates for their products, while delaying the availability of new cures to patients living in countries implementing these policies.”

Numbers to know:

50%. One study found that if the U.S. had employed a similar drug pricing scheme like the one used by Australia, Canada, France, South Korea, and the United Kingdom (three of whom are in the proposed IPI), “aggregate survival gains (i.e., gains in life years) due to innovative medicines would have been cut in half for U.S. patients diagnosed with” certain types of cancer.

Our take:

“In America, we don’t let the government set prices, so why in the world we would let foreign governments set prices for us? At the U.S. Chamber of Commerce, we wake up every day to fight for free enterprise, which is precisely why we oppose this proposal. Our health care system is the best in the world. Let’s keep it that way.” – Tom Donohue (read the full commentary)

What’s next:

HHS’s Centers for Medicare & Medicaid Services is reviewing comments and may issue a proposed rule for the IPI in the spring of 2019, with a potential start in spring 2020, according to the agency. Here at the U.S. Chamber, we are working to educate members of Congress and the public about the potential ramifications of this proposal and its potential harm to patients, innovation and our economy.

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