In NTU’s experience, Congressional hearings tend to take one of two forms. The first resembles an inquiry, where lawmakers seek analysis and input to better understand an issue or to perfect legislation. The second resembles an interrogation, where witnesses are pilloried and peppered with accusations to make a political point. Sitting squarely in category two was today’s hearing before the Senate Health, Labor, Education, and Pensions (HELP) Committee on “Outrageous Ozempic and Wegovy Prices.” Featuring just one witness—the CEO of the company that manufactures Ozempic and Wegovy—HELP Committee Chair Bernie Sanders (I-VT) lays bare through the hearing announcement his true intentions for an even tighter government grip on health care in America.
Ozempic and Wegovy are part of a revolution in health care led by Anti-Obesity Medications (AOMs), which could, in widespread use, dramatically reduce the hundreds of billions in costs to the U.S. economy from medical conditions linked to being overweight. Taxpayers who fund Medicare, Medicaid, and other government-sponsored health care programs stand to save massive sums from the lengthy hospital stays, surgeries, and other treatments that AOMs could obviate.
Senator Sanders is apparently upset that AOMs, like most consumer products, tend to have initially high prices until they can be more broadly marketed. The hearing announcement leads off with a “study from researchers at Yale University” claiming that Ozempic and Wegovy can be “profitably manufactured for less than $5 a month.” But the policy agenda seems transparent in the study authors’ abstract:
Governments have a range of policy tools, procurement mechanisms, and legal avenues available to reduce the prices of unaffordable medicines. These include, for example, price controls and joint procurement between different countries (pooled procurement). For patented medicines, if agreement on an affordable price cannot be reached in negotiations with a manufacturer, many countries have compulsory licensing provisions in their legislation, which allow for generic importation and manufacture regardless of patents. In some cases, public sector manufacture, as is being pursued in California, may also be important.
At least the authors mention one worthy development, that the federal regulatory regime for insulin biosimilar approval is easing somewhat. But, perhaps not so curiously, most of the actions described above can be found in the playbook of Senator Sanders and his “progressive” colleagues. Unfortunately, “progress” toward health care breakthroughs that could save lives as well as taxpayer costs would be dramatically diminished if the playbook is followed in its entirety. The HELP Committee could have saved itself—and its only hearing witness—a great deal of time by reviewing analysis of policy alternatives that can help initially expensive medicines benefit taxpayers over the long run (for example, see NTU’s work here, here, here, here, and here).
Senator Sanders further claims that “some CEOs of major generic pharmaceutical companies are willing to sell Ozempic to Americans for less than $100 per month, at a profit.” He forgot to mention how, exactly, this could eventually happen in the first place. An innovative brand-name product, whose R&D overhead is made heavier by government regulatory requirements, must gradually recover its sunken costs and, after patents expire, can become more widely available through generics and biosimilars. As NTU has noted before, no other country in the world can boast of such a successful policy environment that both encourages discoveries to reach patients (nearly 90 percent of newly launched drugs worldwide are available here) and controls costs (over 90 percent of prescriptions written in the U.S. are for generics).
This synergy, unique to the United States, cannot occur in other countries precisely because they practice price controls and compulsory licensing of discoveries that often occur outside their own borders. The same flawed pursuit of cheap medicines over all else was evident in the “International Price Index” proposals during the Trump Administration.
Interestingly, the generic and biosimilar sector itself added some clarifications to Senator Sanders’s implication that “some CEOs” were standing by to fulfill his policy vision. A statement released last week from the Association for Accessible Medicines lauded the Senator’s “interest in generic competition” but also cautioned that “government policies often stand in the way of such competition.” Among the problems AAM cited were “slow [government] approvals of generics,” “PBM preferences for high-cost, high-rebate drugs,” and “the uncertainty created by a political price setting scheme.”
The latter scheme mentioned in AAM’s statement would be the Inflation Reduction Act’s (IRA) Medicare drug-price negotiation provision that Senator Sanders supported. This section of the IRA is nothing more than coercion backed by absurd new taxes. State-level price control boards, assaults on successful innovation policies like Bayh-Dole, and many other schemes to boost government interference in health care only further imperil the world-leading U.S. advantage in pharmaceutical policy.
Finally, Senator Sanders cites a letter from “more than 250 clinicians” who are demanding price decreases in certain AOMs. The letter was actually organized by an association that supports the IRA’s drug negotiation provisions, “Medicare for All,” and expansion of the Affordable Care Act. While it is perfectly legitimate for members of the medical community to voice their political views, other professionals have a different outlook. For its part, NTU has organized statements from large numbers of economists and policy experts warning against price controls and other government interventions in the marketplace, not only for health care, but also for other sectors.
Congress (and the executive branch) should be working to streamline regulatory pathways, control tax burdens, increase government program integrity, and encourage trade policies that will increase innovation, access, and affordability of prescription drugs. To borrow a few words from Senator Sanders, it is American taxpayers who are “sick and tired” . . . of political theater.