The World Health Organization has declared the novel coronavirus a global pandemic, with more than 118,000 confirmed cases worldwide. As countries brace for the worst, people around the world are looking to the United States for a drug that can prevent or cure the disease.
The world is right to put its hope in American scientists. Our country leads the world in drug development and has the best shot at delivering a rapid medical breakthrough.
Some in Congress seem bent on tearing down our world-class pharmaceutical research infrastructure. They think the government should have the power to set drug prices. But such policies would cripple America's biotech sector, devastate our efforts to fight pandemics and harm patients the world over.
American biotech firms began racing to develop coronavirus treatments almost as soon as the first case was reported in December. Massachusetts-based Moderna Inc. has already sent its experimental vaccine to government researchers for human trials. If testing begins on schedule, it would mark a record three-month turnaround from design to human trials.
Inovio Pharmaceuticals is working on a vaccine that could start human testing around the same time. California-based Gilead Sciences is investigating whether its antiviral drug "Remdesivir" — previously developed to treat Ebola — is effective against coronavirus.
Meanwhile, Johnson and Johnson is teaming up with the federal Biomedical Advanced Research and Development Authority to respond to the pandemic. Through an existing partnership, the company and BARDA will look into whether existing therapeutics could treat or alleviate the severity of coronavirus infections.
This rapid response demonstrates just how crucial U.S. biotech firms are to medical progress and public health. For three decades, the United States has led the world in medical innovation. Seventy-five percent of global medical venture capital is invested in the United States. Our nation produces half of the world's new medicines. U.S. innovators are currently working on more than 4,500 potential new therapeutics, three-quarters of which could be first-in-class.
This is risky and expensive work. On average, it takes $2.6 billion and no less than a decade to bring a new drug from the initial research stage to the market. Only 12 percent of drugs that begin clinical trials ever garner approval from the Food and Drug Administration.
Companies will only roll the dice on drug development if they have a chance to recoup such massive investments. The United States imposes fewer restrictions on the prices of pharmaceuticals than do other countries, which often forcibly control them. So companies have a better shot at financial success in the U.S. market.
The American biotech industry's response to the coronavirus pandemic would look a lot different if the United States implemented price controls on innovative therapies.
That's a significant reason why so much medical innovation happens here.
The American biotech industry's response to the coronavirus pandemic would look a lot different if the United States implemented price controls on innovative therapies. Firms wouldn't have much incentive to develop treatments, knowing the government would eventually seize the fruits of their research at bargain-basement prices.
Inexplicably, both Republicans and Democrats have floated measures that would hamstring medical research and development. The House of Representatives recently passed a sweeping bill, H.R. 3, that would empower the government to cap the price of 250 common brand-name drugs. The prices could not exceed 120 percent of the average prices paid in six other developed countries with socialized health systems, including Canada, France and the United Kingdom.
The Trump administration has toyed with a similar proposal, its International Pricing Index, which would peg the U.S. prices of certain advanced drugs to those in 17 other developed countries.
The House bill's price controls would reduce drug companies' revenues by $1 trillion over 10 years, according to the Congressional Budget Office. That loss of revenue would deter innovators from investing in research and development. If H.R.3 became law, U.S. companies would develop up to 400 fewer new drugs over a decade.
A measure sponsored by Sen. Chuck Grassley, R-Iowa, contains its own version of price controls. Grassley's bill would cap drug price increases in Medicare at the inflation rate. Drug firms could respond to the revenue hit by investing less in research and development — and raising prices for drugs sold outside Medicare, to the detriment of the non-elderly population.
Thanks to our market-friendly health care system, the United States has the best chance of producing the first coronavirus treatment. Let's hope lawmakers stop trying to disrupt this system before the next pandemic hits.