Drug Costs

The IPI, H.R. 3, and the Senate Drug-Pricing Bill

February 6, 2020 9:17 am

In his State of the Union address this week, President Donald Trump noted he was “pleased to announce last year that, for the first time in 51 years, the cost of prescription drugs” went down. In the next breath, however, the president called on Congress to pass legislation to “substantially” reduce prices even more.


While the president did not use his remarks to promote his administration’s International Pricing Index (IPI) proposal, he did indicate he would sign a bipartisan bill “immediately.”


Given his clear tension during the address with House Speaker Nancy Pelosi—and the fact that the White House has issued a veto threat—we know President Trump was not talking about H.R. 3, the Speaker’s drug-pricing bill. But the truth is there is little difference between any of the price-fixing mechanisms on the table. H.R. 3, the IPI, and the Senate Finance Committee bill all would severely curtail innovation in America.


As our Executive Director Patrick O’Connor said in a statement released before the State of the Union, the IPI “would force patients to wait longer for new treatments and devastate the American innovation economy—threatening jobs and the development of new drugs.” The same can be said of H.R. 3 and the legislation considered by the U.S. Senate Finance Committee.


In a column posted just last week, American Action Forum Director of Health Care Policy Christopher Holt compared the Trump administration’s IPI and H.R. 3’s Average International Market (AIM) price. Holt argued, “Ultimately the most substantive difference between Pelosi’s AIM plan and the Trump Administration’s IPI proposal is a matter of scale. … It is simply not intellectually honest for the administration to push forward with IPI based on its own criticism of H.R. 3.”


Last fall, Iowa Central College Professor Don Racheter compared Sen. Charles Grassley’s (R-Iowa) drug-pricing bill and the Trump administration’s IPI. He reminded readers that Sen. Grassley actively opposed the IPI, “which would effectively create a pricing monopoly on drugs between nations.” Racheter concluded “there is nothing different” in the Senate bill.


The Senate bill and H.R. 3 also are similar in impact. Stephen Ubl, president and CEO of the Pharmaceutical Research and Manufacturers of America, has estimated the Grassley bill would “siphon more than $150 billion from researching and developing new medicines.” An analysis by Vital Transformations found H.R. 3 could result in the launch of 56 fewer new medicines over 10 years by reducing funding available for research and development.


While he did not talk about his IPI proposal, President Trump promised again last night to “eradicate the AIDS epidemic in America by the end of the decade.” As we noted before last year’s State of the Union address—when President Trump originally made that promise—Johns Hopkins School of Medicine Adjunct Professor Dr. W. David Hardy said the IPI would create “obstacles” that could keep individuals living with HIV from getting the treatments they need.


Americans struggling to live with HIV and AIDS are not the only ones who would be impacted by the IPI, H.R. 3, and the Senate legislation’s price-fixing schemes.


During the conclusion of his State of the Union, President Trump promised, “Our brightest discoveries are not yet known.” We hope that is true—particularly when it comes to the search for new treatments and cures. But, make no mistake, proposals circulating within the administration and on Capitol Hill would impede the pursuit of those discoveries.