Private innovation and Operation Warp Speed brought us the COVID-19 vaccines in record time along with life-saving treatments like monoclonal antibodies, resulting in millions of saved lives throughout the course of the COVID-19 pandemic. Patients and practicing physicians like myself are eternally grateful.
Yet the American biopharmaceutical innovation success story is a fragile one, at risk of being shattered by dual threats of a rising China and American progressivism.
Over the past five years, the market capitalization of Chinese biopharmaceutical companies has grown over a hundredfold, from $3 billion in 2016 to over $380 billion in 2021, with seven of the 10 largest global biopharma IPOs originating in China. This growth is not accidental: With Xi Jinping’s “Made in China 2025” initiative, pharmaceutical and scientific innovation is a Chinese Communist Party (CCP) mandate, with CCP industry policy previously targeting 2.5 of GDP towards research and development.
Aggressively sourcing foreign intellectual property and human capital, China’s Thousand Talents program has successfully infiltrated the American research community. Advertising openly in scientific journals, the program even reached the top ranks of academia. Law enforcement investigations revealed the program recruited the former chair of Harvard University’s Chemistry Department, Charles Lieber, who in December was convicted of two counts of making false statements to federal authorities, two counts of making and subscribing a false income tax return and two counts of failing to file reports of foreign bank and financial accounts with the Internal Revenue Service. Last month, Lieber filed a motion for acquittal or a new trial.
At the same time, progressives have captured the Biden administration, which in the setting of a multi-year global pandemic has embarked on a crusade against the pharmaceutical industry. While the administration’s attempt to waive vaccine patent rights met resistance, its other efforts have legs that should worry Americans who depend upon innovation to help them live healthier lives.
While price fixing is illegal for both individuals and corporations, progressives propose just that for the pharmaceutical industry, with proposed drug pricing legislation containing a maven of criteria addressing a variety of market challenges with a single uniform principle: price fixing. We know price fixing’s dark history: it was one of the key underlying principles of the economy of the former Soviet Union.
While we owe three cheers to Sen. Joe Manchin (D-W.Va.) for wisely killing Build Back Better, the drug price “negotiation” provision reared its ugly head yet again, with President Biden calling for price controls in his State of the Union address. The pharmaceutical industry has few options to respond calling price controls, with market entry — or in this case exit — as one of its few strategic responses. Facing price ceilings and inflation-anchored rebates, new drugs may launch at higher prices. Ironically, progressive drug price policy may raise drug prices.
More concerning though is the potential loss of innovation and how that will impact patients. While the Congressional Budget Office and Tomas Philipson of the University of Chicago have widely differing estimates of what innovation losses will be, all agree on directionality: Price fixing will lead to less pharmaceutical innovation. While an abstract concept to many, to those suffering devastating illnesses such as cancer or diseases for which there are few or no treatments, innovation is a real and present need.
Over 70 years ago the standard treatment for a heart attack was bed rest. Today patients undergo placement of cardiac stents and take a mixture of products to reduce their risk of a subsequent heart attack, offering a new lease on life for millions of Americans.
Our biopharmaceutical industry hasn’t even realized its potential. We are on the precipice of a biopharmaceutical revolution that will offer Americans more customized and effective treatments, with CAR-T cell therapy offering treatment for some cancers that were otherwise a death sentence and gene therapies in development for certain causes of inherited progressive vision loss. However, instead of addressing regulatory barriers to value-based contracting for high-cost pharmaceuticals such as the Medicaid Drug Rebate Program, moderate swing-state politicians listened to pollsters who found that Americans are interested in drug price negotiation, then mistakenly joined the progressive bandwagon in favor of drug price fixing.
They do so at their own peril. Excessive government overreach and inconsistent guidance during the pandemic prompted revolts across America. With swing-state Democrats facing a tough midterm election and their party platform teetering after the dual failures of progressives’ Build Back Better and election reform, they would do well to move towards the middle and follow their instincts. The last thing Americans need in healthcare is another massive wave of government intervention.
Brian Miller, M.D., M.B.A., M.P.H., is an assistant professor at the Johns Hopkins University School of Medicine and previously worked at the Federal Trade Commission, U.S. Food & Drug Administration and the Centers for Medicare & Medicaid Services.