The Corner

Health Care

Speaker Pelosi’s Drug Pricing Bill Would Hurt Innovation

There’s good news on the Wall Street Journal‘s op-ed page:

Victoria Gray of Mississippi recently became the first U.S. patient with a genetic disorder to be treated using the Crispr gene-editing technique. Doctors used a novel drug to overwrite the function of a faulty gene that gave rise to her sickle-cell disease. Advances in life science can define this century, but policy makers must resist the urge to adopt policies that impose price controls and punish drugmakers for taking risks.

The convergence of information technology and biology allows scientists to translate the human genome into digital data that can accelerate diagnoses and cures. Over the next decade, it is a near certainty that we will have gene-therapy cures for deadly inherited disorders such as muscular dystrophy. Cell-based and regenerative medicine can restore human functions lost to disease, including returning some sight to the blind. Gene editing will be used to alter DNA to erase the origins of a range of debilitating inherited disorders.

That is from an op-ed by my AEI colleague Scott Gottlieb, the former FDA commissioner. Dr. Gottlieb provides nuance to the discussion about the risks from Speaker Pelosi’s sweeping drug pricing legislation, known as HR 3.

The price-control approach would increase uncertainty and reduce returns from biotech investment, raising the cost of capital for these invaluable endeavors. It would alter incentives and shift money from the most speculative but highest-value science, including regenerative medicine and gene editing. Money would flow instead to known disease areas and well-characterized targets, using proven approaches such as pill-form drugs.

New and high-risk drug platforms like gene therapies are often targeted first to treat rare and serious conditions; after they are proven to work safely, they will be used to treat more-common maladies, such as heart disease. This is how medicine advances. But if investors knew their returns would be capped, they would direct their investments toward safer projects with lesser payoffs. We would still get new drugs, but the treatments would be very different.

Read Gottlieb’s full argument here. (And here’s my column on HR 3, from October.)

Yesterday, the House passed HR 3. The president has promised to veto the bill if it reaches his desk. He should.

The House vote will pressure the Senate to take up legislaton on drug prices. Stay tuned.

Michael R. Strain — Michael R. Strain is the director of economic-policy studies and the Arthur F. Burns Scholar in Political Economy at the American Enterprise Institute.  

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