In a blog post for Health Affairs, Chairman Henry Waxman debunks the age-old industry claim that lower drug costs mean a loss of drug innovation, noting they made the same unsubstantiated claim back in the 1980s during debate on the Hatch-Waxman Act.
The current pharmaceutical company warning — just like the 1983 warning that Hatch-Waxman would “substantially reduce the attractiveness of investing in new drug research” — is wrong. In fact, both Hatch-Waxman and H.R. 3 strike the right balance between ensuring access to safe, effective and affordable drugs, and continuing to provide appropriate incentives for innovation.
H.R. 3 does so by finally empowering Medicare to conduct price negotiations with the drug companies, just as all other industrialized countries do, which is why their residents pay roughly 30 cents for every dollar Americans spend on the same drugs. The bill limits the maximum price for any negotiated drug to 120 percent of the average price in other countries. It reverses years of unfair price hikes of many drugs covered under Medicare. And it will make the lower drug prices Medicare negotiates available to seniors and those with private insurance.