BIO: Trump’s Part B pricing scheme ‘undermines the incentive to innovate’

Last month, the US Department of Health and Human Services proposed an international pricing index (IPI) model for Medicare Part B drugs​ and biologics. The IPI proposal will test whether “phasing down the Medicare payment amount”​ for selected Part B drugs – those predominantly administered by infusion or injection – results in reduced expenditures for the Medicare programme.

The US Center for Medicare and Medicaid Services, the department is “taking action on President Trump’s goal to lower drug costs for Medicare beneficiaries by exploring a potential model that seeks to ensure the Medicare programme pays comparable prices for Part B drugs relative to other economically-similar countries.”​

However, Biopharmaceutical Industry Organisation (BIO)’s VP of industry research, David Thomas, has spoken out against the scheme, which he claims not only influenced record lows on the share market last month, but in the long-term, threatens innovation across the sector.

“When investors caught wind of this surprising welcome for price controls in America, that US drug prices would be based on benchmarks here in Europe, this torpedoed the biotech stock market to its single largest day drop in seven years,” ​Thomas told delegates at BIO Europe in Copenhagen last week.

The Nasdaq biotech index dropped 14% in October, and small clinical-stage companies dropped 22%, said Thomas, adding that European biotechs were also affected – dropping 13% last month.

In addition, the scheme threatens innovation within the emerging biotech industry, Thomas told delegates: “We see…an unprecedented amount of biologic technologies coming out of this sector, which are being developed primarily for rare disease and cancer. This is not the time to remove incentives from the ecosystem that will stop that.”​

“BIO has a position of not standing behind non-competitive pricing schemes that undermine the incentive to innovate,” ​he added.