26th November 2019



According to Secretary Azar of Health and Human Services, implementing international reference pricing (IPI) in Medicare Part B will have minimal impacts. He has stated, “These savings, while substantial for American patients and taxpayers, cannot possibly pull out more than 1 percent of R&D.” As companies traditionally spend 20% of free cash flow on R&D, we have measured the IPI impact according to industry standard metrics.

Vital Transformation projected the impact that utilizing international reference pricing for retail medicines (as proposed as part of the Lower Drug Costs Now Act of 2019, H.R.3) would have on the innovative biotechnology sector in the U.S. While the industry revenue reductions resulting from H.R.3 would harm industry innovation across the board, the analysis found that it would have an especially large impact on small, emerging biotech firms that rely on venture capital and revenue streams from the rest of the industry to finance their R&D investments. The result will be fewer medicines coming to market and available to patients.

By Sue Peschin and Duane Schulthess, 21 October 2019

Even with all of the political chatter in Washington, D.C., talk about controlling prescription drug prices is still rising above the din. Of all the proposals being batted around, one that bases prices on an international average of prices in mostly European countries has bipartisan support. This strategy, known as the international pricing index, is particularly worrisome.

First proposed by U.S. Health and Human Services Secretary Alex Azar in the fall of 2018 for Medicare Part B drugs, House Speaker Nancy Pelosi’s drug pricing plan expands it to allow the federal government to negotiate the cost of 250 prescription medicines that aren’t facing market competition. It also extends the negotiated price to insurers and the commercial market at large.