Cross-border Drug Manufacturing /Innovation and Patient Access

Finance: Cross-border Rx: Pharmaceutical Manufacturers and U.S. International Tax Policy, May 11, 2023

WM Health: Examining Policies that Inhibit Innovation and Patient Access, May 10, 2023

WM: Drug pricing puts too much of the research and innovation processes into the hands of companies whose main goal is profit. On top of this, the new Majority seeks to cut spending below the level of inflation, jeopardizing new research. This must be rethought.

Regardless of where drugs are developed or manufactured, their costs do not vary by where they are sold. Indeed, if a drug is manufactured in the United States, it may have a lower price in other markets - although usually manufacture has shifted to Asia. Prices are another matter. They are dictated by what the market will bear, given the regulatory environment of each market. As long as price is less than the cost, the drug will be sold. Sadly, this puts prices out of reach in the developing world.

PhARMA relies, in part, on claims that negotiation will lead to cost shifting. The dirty little secret in this debate is that single-payer solutions in the rest of the OECD have already resulted in price (not cost) shifting, where the rest of the world shifts its cost to the United States to the greatest extent possible (although they might anyway) 

Most people with insurance don’t notice this. Single payer healthcare, either through a public option or Medicare for All, will further bury this. For now, allowing drug price negotiation will give drug companies leverage to renegotiate their deals with the rest of the world. As a side note, how Medicare for All or a Public Option might work is explained in an attachment.

PhARMA also relies on the claims that new cures for pandemics and subsidizing the development of orphan drugs and new therapies requires the right to charge the most the market can bear. This ignores the fact that most basic research comes through government grants and contracts, not drug company profits. The latter fund commercial, not scientific, development. 

An important part of decreasing cost to consumers is to expand funding, such as the President’s ARPA-H proposal. Part of ARPA-H is the funding for research on orphan drugs and the lingering problem of their cost once research leads to product development. In comments to Senate Finance on March 16th of this year, we repeated our proposal in this area for NIH to retain ownership in any such drug and contract out its further development and manufacture. Keeping ownership in public hands ends the need for drug companies to charge extreme prices or increase prices for its existing formulary to fund development. 

PhARMA would still make reasonable profit, but the government would eat the risk and sometimes reap the rewards. NIH/FDA might even break even in the long term, especially if large volume drugs which were developed with government grants must pay back a share of basic research costs and the attached profits, as well as regulatory cost.

Finance Only:

International tax policy is broken. The United States leaves potential revenue on the table by not enacting consumption taxes. This hurts American manufacturers, whose sales must include the cost of government in the United States, which may be an unconstitutional export tax if looked at from a product cost perspective. A second attachment gives background to our consumption tax proposals as context for the third, which discusses how these will impact trade.

We propose repealing corporate profits taxes as part of the creation of a subtraction value added taxes and repeal of capital gains taxes in the United States will lead to their repeal worldwide. If Asset Value Added Taxes are adopted, as described in the fourth attachment, the rate should be negotiated so that investors who are able do not market shop for the lowest rate. The recent OECD compact on minimum rates is an example of how tax cooperation on capital can work for other types of asset taxation.

Ways and Means only

Hospital consolidation and privatization (i.e., the closing of public hospitals - often at the behest of industry) limits access and drives poor patients to emergency rooms because they are uninsured. It is good of the Republican Majority to get on board in objecting to such bad behavior. It is even worse in some regions, where the only hospital system remaining is run by Catholic religious orders, which limits family planning and abortion access (with the blessing of public law). 

When only Catholic hospitals are left in some states, due to consolidation, it makes this policy that more acute. In order for such hospitals to fully serve women, the drama of abortion politics must settle into compromise. There are proposals on both sides for a federal solution - either a federal law banning most abortions or permitting it in all cases. At some points, electoral stunts need to recede and real compromise must be sought.

In both scenarios, the need to take the issue away from the states is obvious. Justice Alito ignored the problems of both slavery and Jim Crow as reasons why there should not be abortion states and anti-abortion states. The respondents relied on the question of rights rather than on the question of powers. Had they examined the competencies of federal and state government on the question of who makes the rules on personhood, the answer is obviously that this responsibility must be federal. 

A ruling along those lines would have ended the issue at the status quo - with no regulation of abortion unless Congress recognized the rights of the unborn as reservoirs of positive rights. They are already recognized as having the right to life against government action. It is the same as the right to life for adults - the right to not be executed without due process. It is why we do not execute pregnant women, as well as the right to seek redress for outside injury. 

What they cannot claim is a right against the welfare of its mother - especially if the child is doomed due to a fatal defect. In such cases, termination is the only ethical solution - even in Catholic hospitals. Especially if the Catholic hospital is the only hospital for miles around.

For the larger issue, the right to an abortion in the very early stages should be federally guaranteed. After the embryo becomes a fetus - a little person in Latin - then pregnancies should be ended in a live birth, but with no medical intervention required to save the child (other than baptism or other religious blessing). This form of termination should have no upper limit. No one has a right to NOT be born.

Attachment: Single Payer Video

Attachment: Consumption Taxes Video1 Video2

Attachment: Trade Policy Video

Attachment: Asset Value Added Taxes Video