Strategic Medicare Contracting Forum

20-21 November 2019, Alexandria, US

Duane Schulthess Discusses the Impact of the IPI on Patients, Outcomes and Innovation

21 November 2019 2.15pm ET

Vital Transformation has conducted two studies examining the impact of the proposed international reference pricing in Medicare Part D (H.R. 3, the Lower Drug Costs Now Act of 2019) on the world-class innovative biotechnology sector in California and the United States. The California Life Sciences Association (CLSA) – the statewide public policy organization representing California’s life sciences innovators – commissioned the California study, while the U.S. wide research has been conducted with the support of the Pharmaceutical Research and Manufacturers of America (PhRMA) – the trade group representing companies in the pharmaceutical industry in the United States.

Key Findings:

  • Implementing international reference pricing (foreign price controls) in Medicare Part D as a method to lower drug costs will have negative effects on the entire US biopharmaceutical economy.
  • Such a policy will lower industry revenue by $71.6 billion a year ($358 billion /5 years), representing a reduction of 58% of earnings before interest and taxes (EBIT) revenue.
  • The 58% reduction in EBIT revenue could result in excess of an 80% reduction in the number of drugs that are brought to market by small/emerging biotech companies in the united states.