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Biotech trade groups sue Pres. Trump over drug pricing rule

San Diego-based Biocom said the rule will hurt development of new drugs.

SAN DIEGO — Pharmaceutical trade groups filed lawsuits last week over President Trump's effort to lower Medicare drug prices.

San Diego biotech groups said the Trump plan would hurt new drug development across the industry.

Trump’s executive order announced last month was aimed at lowering prices on Medicare Part B drugs, which are administered at doctors’ offices, outpatient centers and hospitals. They include intravenous drugs for kidney patients, organ transplant patients, and cancer patients.

“The drug companies don't like me too much, but we had to do it,” said Trump at a Nov. 20 event. “For example, Medicare Part B recipients are forced to spend five times more for a common breast cancer medication than patients in other countries.”

The so-called Most Favored Nation rule ties prices paid by Medicare for the drugs in the United States to the prices charged for the same drugs in other developed countries.

“It's certainly price control and it is dictating what the price will be,” said Joe Panetta, CEO of Biocom California, a San Diego firm that advocatess for the life sciences industry.

Biocom California is a plaintiff in one of the federal lawsuits aiming to block Trump’s executive order.

“Many of these drugs take a significant amount of financial investment do develop. They're drugs that take a lot of risk on the part of the companies that develop them,” Panetta said.

“When a system of price controls is imposed and there isn't an open market of competition for pricing, then there isn't an incentive here in San Diego for those investors to put money into the companies that are doing the innovation to develop those products,” Panetta explained.

But other experts agree with Trump's efforts to take on the pharmaceutical industry.

“This is not a system of price controls. This is simply aligning what Medicare -- a government program -- pays for a drug with the market price in the global market,” said Avik Roy, president of the nonprofit Foundation for Research on Equal Opportunity in Austin, Texas.

“The way the system works now is whatever price the biotech company or the pharmaceutical company wants to charge, Medicare pays it. The industry treats the taxpayer and the senior like a giant ATM in which the money is just taken out of your wallet whenever the industry wants to take it.  And, that is a pretty dumb system,” said Roy.

The new rule is set to take effect on January 1, 2021. It remains unclear, however, whether the incoming Biden administration will keep the rule in place as the lawsuits make their way through court.

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