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.
- 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.