Opinion: Life Sciences Save More Than Lives

OPINION

The storied achievements of our life sciences sector – our biopharmaceutical, biotech, diagnostic and medical device companies – are globally known.  Since the early twentieth century, they range from the discovery of penicillin to COVID-19 vaccines; the first polio vaccine to the first-ever treatments for Alzheimer’s; advances in the treatment of traumatic brain injuries to the first-ever cure for Hepatitis C; and a vaccine against cervical cancer to advances in the search for a vaccine to prevent HIV/AIDS. 

New Jersey, long known as the “Medicine Chest of the World,” has been at the forefront of medical innovation for even longer.  This industry is the engine that drives New Jersey’s workforce and economy.  With the most scientists and engineers per square mile in the country and with 14 of the world’s 20 largest research-based biopharmaceutical companies and 12 of the world’s 20 largest medical technology companies having a presence here, our state is home to 1,700 life sciences establishments.  Over 430,000 total life sciences-supported jobs (direct and indirect) represent 10.6 percent of all jobs in the state. 

However, with the Inflation Reduction Act’s (IRA) unprecedented government price-setting for life sciences companies and efforts to expand it even before it starts, patient access and future medical breakthroughs, as well as a pillar of New Jersey’s economy, are not the only things in jeopardy.   

Also at risk are the life sciences sector’s often-unrecognized financial support for so many of our nation’s health care components that underpin the very government programs designed to alleviate the suffering of our citizens.  They include each state’s Medicaid program, the Veterans Administration, the Food and Drug Administration, Medicare’s so-called “donut hole” (also known as the “coverage gap”), the Affordable Care Act, and many hospitals around the country, not to mention hundreds of patient assistance programs that life sciences companies offer directly to patients. 

THE OVERALL HEALTH CARE SYSTEM:  In 1984, Congress enacted the Hatch-Waxman Act named for its authors that set strict time limits on patents for newly discovered medicines.  When those patents expire, other companies can copy the medicine and sell “generic” versions at a much lower price.  As a result, today, 90% of all prescriptions written in America each year are for generic medicines – saving hundreds of billions of dollars for patients, health care systems and federal and state governments annually. 

In fact, medicines are the only component of our health care system that actually save money elsewhere by initially offering cost-effective treatment alternatives to hospitalizations, surgeries and long-term care.  Patient adherence to prescribed medicines can avoid or reduce those responses and the associated expenditures by insurance companies, federal and state government health care programs, hospitals and patients.  The Centers for Disease Control and Prevention (CDC) estimates that “direct health care costs associated with nonadherence have grown to approximately $100–$300 billion of U.S. health care dollars spent annually.” 

VETERANS ADMINISTRATION:  America has approximately 22 million veterans who have served in our nation’s armed forces, 40% of whom are covered by the VA’s health care system.  By law, the VA purchases the medicines they administer to veterans at a steeply discounted price versus what the medicines actually cost. 

MEDICAID:  The federal government requires each state to run a Medicaid program designed to provide health care to low-income adults, children, pregnant women and adults with disabilities, totaling approximately 86 million Americans.  Drug companies pay rebates to the federal and state governments to offset the overall cost of the medicines prescribed to Medicaid patients – in effect, significantly discounting the medicines’ actual cost. 

AFFORDABLE CARE ACT:  One of the most comprehensive expansions of health care since the creation of Medicare and Medicaid, the Affordable Care Act (ACA) now provides health care coverage to 35 million more Americans than before its enactment.  Biopharmaceutical companies agreed to pay $90 billion over ten years to help cover the costs of the ACA’s creation and implementation. 

MEDICARE COVERAGE GAP:  Medicare beneficiaries are well aware of the “donut hole,” or the coverage gap that results when a senior surpasses $2,800 in annual drug coverage, and Medicare won’t cover any additional medicines until the patient reaches $6,400 in spending on medicines (out of their own pocket).  At that point, Medicare’s “catastrophic coverage” kicks in.  Biopharmaceutical companies now cover 70% of the costs of that coverage gap for seniors on Medicare. 

340B:  340B is a government program designed to help vulnerable patients access medications they might not otherwise be able to afford.  It requires that drug manufacturers provide medicines at significantly reduced prices to hospitals, clinics and other health care facilities in order to “stretch scarce federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.”  Since 1992, billions of dollars in significant discounts have been provided to hospitals and clinics for their qualifying patients. 

FOOD AND DRUG ADMINISTRATION (FDA):  The FDA requires that biopharmaceutical, biotech and medical technology companies pay “user fees” to the agency as part of the FDA’s review of new and innovative, often life-saving medical advances.  According to the FDA, this is “to supplement the annual funding that Congress provides for the agency.  User fees help the FDA fulfill its mission of protecting the public health,” among other activities.  Life sciences companies fund the FDA, one of the linchpins in America’s health care system, with approximately $1.7 billion annually. 

PATIENT ASSISTANCE PROGRAMS:  Life sciences companies maintain hundreds of robust patient assistance programs that can provide directly to patients their medicines at low- or no cost based on their financial circumstances. 

As we prepare for the IRA’s implementation, we are entering unchartered waters.  The uncertainty of the new law’s impacts on future medical advances, patient access and the health of America’s life sciences sector, indicates a need for caution to avoid unanticipated consequences, some of which are already occurring.  Expanding this law even further, even before it has been implemented, as recent proposals in Congress would do, would be a dangerous gamble for patients, medical innovation and America’s health care system.   We urge our federal legislators to refrain from any further action until the true impact of this law has been fully understood.