A nonprofit publication of the Kentucky Center for Public Service Journalism

Kyle Keeney: Here’s why Medicare price-setting isn’t the solution to fixing our healthcare problems

Earlier this month, the Northern Kentucky Tribune’s Bill Straub wrote a column supporting his belief that more government intervention in the healthcare market is a necessary good. However, in the process, he trivializes the industry’s lifesaving work — did he really miss the three COVID vaccines in record time — and the role of innovation in addressing serious health concerns in our country.

Straub’s assessment of the pharmaceutical industry is more than just off base; it also demonstrates his severe lack of understanding of how the U.S. healthcare system truly works and how new, lifesaving medicines are developed.

Dr. Kyle Keeney

The shortsighted solution the author proposes is focused on more centralized control—specifically, so-called government “negotiation” in Medicare. But the government’s version of “negotiation” is quite different than how we the people understand it. Under this plan, the federal government would establish itself as the authority over the market for prescription drugs, setting prices for specific medicines and treatments. Bureaucrats would force pharmaceutical companies to either accept their listed price or not sell their drug to Medicare at all. That’s the government’s conception of “negotiation.” Our way or the highway.

To support the argument for government price controls reducing costs, he cites the Veterans’ Affairs (VA) program, which utilizes its own form of government price-setting. However, his VA example backfires, illustrating that reducing costs isn’t the only factor that merits concern. As a result of the VA’s price setting, many veterans and their families struggle to access the drugs they need. Due to these access restrictions, more than half of all veterans supplement their VA benefits with other sources of drug coverage, including Medicare Part D!

Is this really the model most American’s want for their healthcare?

For many VA beneficiaries, Part D remains a bastion of healthcare access—yet government “negotiation” would rob them of precisely that, creating the same restrictions in Medicare that are pervasive throughout the VA’s healthcare program. Oddly enough, Straub seems to recognize this reality, if only in part. He concedes: “Now, it’s true that the CBO determined it’s likely that some new drugs won’t hit the market as quickly as in the past as a result of negotiations.”

According to recent estimates, establishing a Medicare price-setting system would cost the pharmaceutical industry a stunning $1.5 trillion over ten years. And for every $1 to $2 billion reduction in biopharmaceutical R&D, one new potentially lifesaving drug isn’t developed. In this way, it’s easy to see just how devastating the policy’s effect on pharmaceutical innovation would be.

Simply put, the numbers don’t lie, and the consequences of government price-setting on innovation are both real and catastrophic. And that’s not something that just impacts the pharmaceutical industry—that impacts all of us, our families and the future health of our children.

Far from it being “unfathomable” that anyone would oppose establishing a price-setting scheme over Medicare, there are actually several good reasons to do so. Principally, such a proposal is just bad policy. It would strip the biopharmaceutical industry of the financial tools it needs to innovate, leading to the production of fewer new medicines, and restricting Americans’ access to prescription drugs.

We’ve all had to learn some harsh lessons during this terrible pandemic. But one positive thing has been seeing firsthand that American scientific innovation remains critically important to public health. That should teach us all another valuable lesson about the importance of fostering more innovation to defeat the next pandemic and to continue fighting the ones we already face.
But the very last thing we should do is stop American innovation in its tracks.

Dr. Kyle Keeney is the Executive Director of the Kentucky Life Sciences Council.

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  1. TT Woodside says:

    Dr. Kyle Keeney,

    Sir, thank you for your accurate and balanced article. Refreshing to read an honest evaluation based on facts.

    Many of us no longer read Bill Straub’s opinion articles since he’s mainly influenced by his political views.

  2. Patrick Raverty says:

    What else would expect from one who represents Big Pharma

Reply to Patrick Raverty Cancel Reply