Health Care

Right now, literally as I type this, Australian trade negotiators are reportedly resisting U.S. demands for increased protection of pharmaceutical and biotech innovation in the Trans-Pacific Partnership (TPP) agreement. They are no doubt motivated by the warnings of Australian academics and researchers that Australia’s Pharmaceutical Benefits Scheme (PBS), which the Australian government uses to control drug prices, will be weakened or undone altogether by extending the period of data protection for biologics, among other provisions.

The sky-is-falling warning from these academic critics of the pharmaceutical industry is that protecting the products of innovation will necessarily result in dramatic price increases, which Australia (and Australians) will no longer be able to afford.

Interestingly, Australian academics made this exact same argument in 2003, warning Australia about the treaty that was then being negotiated, the Australia-U.S. Free Trade Agreement (FTA).  

I have before me a copy of a paper published by The Australia Institute, entitled “A Backdoor to Higher Medicine Prices? Intellectual Property and the Australia-US Free Trade Agreement,” by Dr. Buddhima Lokuge, Dr. Thomas Alured Faunce, and Richard Denniss.

The paper predicted that the Australia-U.S. FTA would result in dramatic increases in the cost of prescription drugs in Australia.

“This paper examines five leading medicines near the end of their patent lives in Australia. Based on PBS expenditures for these drugs in 2003, we estimated the potential cost of likely changes to IP provisions under the FTA to the PBS and Australian taxpayers. The costs accrue over a four-year period from 2006 to 2009. . . . The ‘central case’ estimate is that the additional cost of these five drugs alone, as a result of IP provisions in the FTA, will be more than $1.12 billion with a lower estimate of $850 million and an upper estimate of $1.56 billion.”

But they were wrong then, and they’re likely wrong now.

A piece in today’s Dominion Post (New Zealand) finds that warnings about higher drug prices as a result of free trade agreements are baseless, as least as far as facts are concerned:

“We can't assume medicine costs will increase if some patents or Intellectual Property protections are extended. Speculation about rising medicine prices under the TPPA mirror concerns Australians voiced over the U.S-Australia FTA. However, since signing the FTA in 2005, Australia's spend on pharmaceuticals has remained stable and the rate of expenditure has decreased. In 2006 Canada's pharmaceutical spend decreased after implementing an eight year data protection period. Similarly, after Japan increased data protection in 2007 to eight years, pharmaceutical spend decreased and health care spend increased by the year 2010.”

On Monday, a writer named Fran Quigley had a piece published on the Foreign Affairs website that was highly critical of some of the provisions in drafts of the Trans-Pacific Partnership (TPP) agreement.

We’ll get around to dealing with the arguments in Quigley’s FP article in a separate blog post.

Quigley’s title of “Clinical Professor of Law in the Health and Human Rights Clinic” at Indiana University tells us much of what we need to know. If you merge health and human rights, you have already decided that access to every bit of the latest health care technology available is a human right, and if it’s a human right, it’s your right to have it for free, or for something very close to free.

That makes Quigley an activist more than an analyst of the provisions of the TPP. A look at his cv demonstrates that Fran is a social justice crusader, a proponent of the labor movement, and a neighborhood organizer type.

IPI's Dr. Merrill Matthews joins ASCO, the world's largest conference of cancer specialists, tonight in Chicago to discuss the role research and development plays in fighting cancer and why innovation is critical for patients. 

Today in the Wall Street Journal, there is good op/ed about the threat of Ebola and other infectious diseases that urges us to invest more money in medical innovation.

There's also another op/ed complaining that cutting edge, innovative medical cures are too expensive, and that we need something apparently just short of price controls to do something about it.

So which is it? Do we want pharmaceutical and biotech companies taking risks and innovating new cures, such as Sovaldi, the new cure for hepatitis? Or not?

Ms. Ignagni's piece is particularly egregious. It's part of a campaign that she's behind to get the federal government to forceably lower the price of Sovaldi, a blockbuster new miracle cure for hepatitis C. Note the word "cure."

First, she writes as if concern over high drug prices is a recent phenomenon, which of course it isn't. I've been hearing statists complaining about high drug prices for the 20 years I've been doing public policy. In fact, the first paper I ever edited and published at IPI was on this very topic. The redistributionists have never understood why they can't have all their diseases cured and their pain alleviated without it costing anyone anything. They're always focused on the second order concern--how goods are distributed--without fully appreciating the first order concern--how goods come to be in the first place.

Distributing existing goods is easy--innovating a new product or service that never existed before, now that's impressive. But apparently not to Ms. Ignagni.

I was talking with a lady, who is probably in her late 50s, when she told me she was going to start looking for a different job. See, she’s a teller working in the branch of one of the country’s largest banks, and the bank is making some cutbacks, turning its full-time tellers into part-timers (at some branches anyway).

I asked the next question, but I was pretty sure I already knew the answer: How many hours was the bank willing to let her work? Under 30, she said, which just so happens to be ObamaCare’s dividing line between those who must be covered with employer-provided health insurance and those who don’t.

Health and Human Services Secretary Kathleen Sebelius has taken a lot of heat for asking--some would say shaking down--health insurance executives for money to help implement ObamaCare. So it has changed the messenger, but not the message.

The 2013 AT&T Developer Summit is underway in Las Vegas today. One of the many sessions hosted by AT&T, which are aimed at developers who are developing products, apps mainly, for use on their platform, was about mHealth, a sub-part of health technology.

Mobile health is an exciting area for many reasons but not the least is the huge potential for better outcomes for patients and opportunities for industry.

At a time when Congress can find very few issues on which there is widespread bipartisan support, it is important to act quickly and decisively when it does. One of those issues is currently before the Senate, the Food and Drug Administration Safety and Innovation Act, or FDASIA (S. 3187), a reauthorization and update of the Prescription Drug User Fee Act, or PDUFA.