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White House report on Pelosi drug-pricing bill flawed, health policy experts say

A new White House report that said House Speaker Nancy Pelosi's drug-pricing legislation could lead to 100 fewer new medicines, cost the nation $10 trillion and reduce Americans' average life expectancy by four months drew immediate criticism on social media from health policy experts.

"This is nonsense," Stacie Dusetzina, an associate professor in health policy and cancer research at Vanderbilt University Medical Center, tweeted about the Dec. 3 report. "I am not one to throw shade on simple analysis. There are just so many problems here beyond the calculation."

The analysis from the White House Council of Economic Advisers of Pelosi's bill relies on outdated estimates, Dusetzina said. She noted the White House used drug development information from 1960 to 1997 on which to base its shortened life expectancy claim.

"This doesn't reflect today's market," she said.

Pelosi spokesman Henry Connelly called the White House analysis a "love letter to big pharma."

"This White House has proven again and again that it cannot be trusted to provide accurate numbers or honest analysis, especially when it comes to Americans' healthcare," Connelly told S&P Global Market Intelligence in an emailed statement.

Pelosi's bill, unveiled Sept. 19, would give the federal government the power to negotiate the prices on up to 250 medicines that lack competition in the U.S on behalf of the Medicare program and the commercial insurance market.

Increase cap

The legislation, known as H.R. 3, would cap price increases for Medicare drugs at the rate of inflation. It also would rely on an international reference pricing scheme — mirroring an idea that has been under consideration by the White House, though that proposal is now being reworked.

In an Oct. 11 preliminary analysis, the nonpartisan Congressional Budget Office said H.R. 3 would save the Medicare program $345 billion between 2023 and 2029. Medicare Part D beneficiaries' premiums would also be lower.

But the CBO also said the bill would result in a drop in drug industry revenues of up to $1 trillion over the next 10 years, possibly leading to a reduction of eight to 15 new drugs coming to market.

The White House economic advisers estimated that drugmakers would lose up to $200 billion in research and development expenditures over the next decade. If a new drug costs a company $2 billion to develop, that could result in as many as 100 fewer drugs entering the market over 10 years, they said.

But Peter Bach, director of the Drug Pricing Lab at Memorial Sloan Kettering Cancer Center in New York, said the White House report was "internally contradictory," given some of the Trump administration's ideas for lowering drug prices also would decrease manufacturers' revenue.

Either decreased prices equals decreased revenue equals decreased innovation or not, Bach tweeted.

How that endpoint is achieved — Trump administration proposals versus Pelosi's H.R. 3 — should not matter, "and yet here apparently one approach scuttles innovation and the other doesn't," Bach said.

Economic logic

Rachel Sachs, an associate professor of law at Washington University in St. Louis, noted that most of the economic logic the White House used would apply to the Senate Finance Committee's drug-pricing package and the administration's pending foreign reference pricing proposal.

It would be interesting to run the White House economic advisers' analysis on those proposals and see what the results turn up, Sachs said.

The White House has backed the Senate Finance Committee's bipartisan drug pricing bill, declaring it the best legislative option for lowering the costs of medicines, though it focuses only on the Medicare population.

Sens. Chuck Grassley, R-Iowa, the committee chairman, and Ron Wyden, D-Ore., the ranking member, are expected to soon unveil a revised version of their bill.

Walid Gellad, associate professor of medicine and director of the Center for Pharmaceutical Policy and Prescribing at the University of Pittsburgh, took issue with the White House's claim that the 100 drugs it said could be lost would be "lifesaving" medicines.

"Where is any empirical evidence" any of those drugs would save lives, he tweeted.

"Zero evidence," Gellad said.