Policy and Legal

Policy and Legal

NAM Hits Back at Price Controls in PAHPA Draft

The Pandemic and All-Hazards Preparedness Act, which expires at the end of September, is critical to public-health emergency readiness. Yet, a Senate bipartisan discussion draft to reauthorize it contains some provisions that are troubling to manufacturers, the NAM told the Senate Committee on Health, Education, Labor & Pensions this week.

The background: The Senate released a draft of a bill last week to reauthorize PAHPA, a measure passed in 2006 with the intention of ensuring national readiness for public-health emergencies.

Imposing price caps: The draft contains a requirement to cap the cost of any product that has received support from either the Centers for Disease Control and Prevention or the Biomedical Advanced Research and Development Authority “at the lowest price charged for such … product[s]” among the G7 countries (the U.S., Canada, France, Germany, Italy, Japan and the United Kingdom).

  • Such a move would erase the advances made over the decades since the 1980 passage of the Bayh-Dole Act, which created mutually beneficial economic partnerships between the federal government, universities and private industry, NAM Managing Vice President of Policy Chris Netram said in his message to the committee.
  • A price limit “would reduce the positive impact of the Bayh-Dole Act by imposing price controls on products developed through the innovation spurred by these partnerships,” he said.

Deterring innovation: Pricing controls also threaten continued scientific advancements of the sort that have cured once-prevalent diseases and solved “some of the world’s most prevalent and challenging health issues,” Netram continued.

  • “The development of new medicines demands tremendous financial investment, many years of intensive effort and a willingness to accept significant risk. While public–private partnerships are important in stewarding new drugs to market, pharmaceutical companies bear almost the entire cost of discovering new drugs, ushering them to approval and scaling them through manufacturing.”
  • In 2019, the pharmaceuticals industry invested more than $83 billion in the research and development of new drugs, Netram said, citing Congressional Budget Office data.

Stopping the flow of medication: Perhaps most concerningly, setting cost caps on drugs also jeopardizes the flow of medications to those who need them, Netram told the committee.

  • “Price controls … restrict the supply of medicines to patients,” Netram concluded. “As such, price control language should be excluded from the PAHPA.”
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