Reprinted with permission from Lou Kennedy, Nephron Pharmaceutical Owner and CEO. Nephron is outside of Cayce, in the Saxe-Gotha Industrial Park and has a West Columbia address. It’s one of Lexington County’s largest, and highest paying companies.
It is common knowledge that health care costs have risen in recent years and we all agree something needs to be done to save patients dollars at the pharmacy counter. However, we also must acknowledge that there are millions of Americans waiting for the next generation of lifesaving and life-improving treatments, and that millions of jobs depend on the pharmaceutical industry.
We are fortunate to live in a country that incentivizes our best and brightest to work in our hospitals, clinics and pharmaceutical research laboratories. Over the past decade, we have seen medical science fundamentally change the way we treat some of the most deadly and debilitating diseases such as cancer, HIV-AIDS, hepatitis C and other complex, rare diseases that were at one time considered a death sentence.
As the CEO of a woman-owned pharmaceutical manufacturer in South Carolina with nearly 2,000 employees — 650 of whom are local teachers who are a part of a new educator program we launched this year to provide a strong secondary income to South Carolina educators — I understand that innovative drugs are only life-changing if patients can access them.
The reality is that tackling high health care costs in the U.S. is extremely complicated and, in order to make lasting change that truly benefits all patients, will require a practical and bipartisan approach in Washington. To see long-term patient savings, at a minimum, Congress must coalesce around seeing negotiated savings issued by pharmaceutical companies shared directly with patients, implementing increased transparency rules on costs for the entire health care ecosystem and promoting value-based payment arrangements for patients.
As an employer who bears the brunt of bad legislation, it is extremely concerning for me to see our health care problems become so overtly politicized by our leaders. It seems as if there is no end to the talk of nonsensical sweeping proposals from lawmakers who aspire to fantastical ends without considering the real means necessary to make them happen or the unintended consequences likely to result.
One recent proposal — Speaker Nancy Pelosi’s Lower Drug Cost Now Act (H.R. 3) — is the latest and the most radical piece of legislation to be birthed by the politics of health care. The speaker’s bill attempts to lower drug costs by blowing up our health care system and will put the future of the pharmaceutical industry squarely in the hands of the federal government.
The speaker plans to lower costs by implementing European-style government price setting in the U.S. As constructed, H.R. 3 would set both a “ceiling price” and a “target price” for new drugs. The ceiling price would be based on the average price in six foreign countries with government-run health care systems, and the target price would equal the lowest price of a medicine in any of the same six countries. While the speaker is telling the public that this is not price setting but “price negotiation,” what she fails to emphasize is the fact that if a company does not accept the price the federal government sets, they are then hit with a tax of up to 95% of the sale of the medicine. If that isn’t a price control, I don’t know what is.
Equally as troubling is H.R. 3 would embolden the U.S. government to dictate which diseases are worthy of future research and investment. Such an approach would certainly discourage investors who devote almost $100 billion in capital each year to research and development of new cures and treatments.
Finally, the bill would upend the supply chain by further decimating the federal reimbursement rate, which would severely undercut manufacturers like me. What seems to be lost on Speaker Pelosi is that there is already a low margin on manufactured drugs, so this bill would reduce the number of critically needed medications we can manufacture, thus creating the need for fewer jobs.
When a drug makes a big difference, you can’t put a price on that. I and others in our industry wholly support lowering costs for patients at the pharmacy counter, but the Lower Drug Costs Now Act before Congress is not the right prescription for American patients or businesses.