College athlete Corey Wood listened in shock as her doctor walked her through the bleak diagnosis of stage 4-lung cancer, which had already spread to her lymph nodes and bones. Despite never smoking, the marathoner faced just a five percent chance of living five more years.
That encounter occurred in 2014. Today, 23-year-old Wood is cancer-free—and running up to 20 miles a day.
Wood owes her life to the blistering pace of American medical research. After her physicians discovered that her cancer resulted from a rare genetic mutation, they treated her with a cutting-edge medicine designed to target that specific defect. This March, the Food and Drug Administration approved expanded use of the drug, a potentially life-changing development for thousands of patients like Wood.
American research firms develop dozens of such advanced, targeted drugs each year. But that flow of lifesaving discoveries could soon cease if some shortsighted lawmakers continue their opportunistic and uninformed crusade against the U.S. pharmaceutical industry.
California lawmakers, for instance, are considering a bill (SB 1010), introduced by Sen. Ed Hernandez (D-22), that would require pharmaceutical companies to disclose marketing budgets, public research funding grants, and reams of other information related to their development and sales of prescription medicines. Hearings on the bill are scheduled for late spring. If the bill ultimately becomes law, it would apply to most new treatments for cancer and other deadly diseases.
Such transparency requirements aren’t just an obscene government overreach into private companies’ affairs. They’re also stepping-stones to price controls. The laws, if passed, will hinder research efforts and discourage developers from creating the kinds of cutting-edge drugs that saved Wood’s life.
Each new drug arrives on pharmacy shelves only after going through a decade or more of laborious research and development, which costs $2.6 billion on average. Failed drug candidates litter the pathway to each successful medicine. Of 5,000 potential medications, only five ever make it to human testing—and of those five, only one gains federal approval.
Even approval doesn’t guarantee a return on researchers’ huge upfront investments. Only two in 10 medications that garner FDA approval ever make enough money for drug companies to break even.
So-called ‘transparency’ bills ignore these realities. They’ll only apply to the select few successful drugs that survive the R&D gauntlet—hardly a representative sample of all research projects.
But to the average observer, profits on these medicines will seem normal and unjustifiably high. The resulting public outrage will give lawmakers an excuse to impose price controls on medicines.
By making it harder to earn a return on research, controls will scare away pharmaceutical investors and cripple efforts to develop much-needed new drugs. Economists have concluded that price caps that cut drug prices by 40% to 50% will force companies to axe up to 60 percent of planned research and development projects.
Transparency bills are virtual guidebooks about how to strangle the world-class American pharmaceutical industry, killing tens of thousands of jobs and even more patients in the process.
Drug prices are high, but transparency bills aren’t the solution. They will only paint a skewed picture of drug pricing that leads to price controls.
If government bureaucrats proceed with such shortsighted measures, severely ill patients like Corey Wood will never reach the finish line in their battle against cancer and other deadly conditions.
(Robert Cresanti served as Under Secretary for Technology at the U.S. Department of Commerce from 2006 to 2007, where he advocated globally for America’s high tech industry.)