With the rallying cry of corporate greed, each year of the Biden-Harris administration has brought successive government interventions in the health care system — broadly directed at the life sciences industry including large companies employing thousands of Americans, entrepreneurs and the many creative, scrappy small businesses driving revolutionary innovation. Through one-size-fits-all administrative actions and partisan legislation, the Biden-Harris administration has both stifled innovation and made it harder for new drugs to reach patients.
The Biden-Harris administration’s push of the 2022 Inflation Reduction Act brought about an approach that many economists thought had died, while others warned was rising anew: centralized price regulation. Administrative pricing and inflation rebates for pharmaceutical product manufacturers resurrected a dangerous centralized “command and control” economic model.
While government, congressional oversight, and independent experts are evaluating the scale of the IRA’s negative impact on innovation and development, other consequences remain to be understood. A static policy intervention in a market desperate for dynamism, the IRA’s expected savings is already estimated as less than originally projected.
The impact on patients is real and is a policy question that will be subject to long-term debate. An early modeling study from a group of University of Chicago economists found that the drug price controls in a legislative proposal similar to IRA would lead to an estimated $663 billion loss in research and development investment — leading to at least 135 fewer medications and more than 330 million life-years lost. Since the passage of IRA, the website Life Science Tracker notes that companies have discontinued an additional 36 research and over 21 drug development programs. In oncology alone, over a dozen drug development programs have been discontinued, directly undermining Biden’s Cancer Moonshot initiative.
Furthermore, intellectual private property is newly under threat, with the National Institute of Standards and Technology (NIST) issuing draft guidance on exercising government march-in rights. A response to the economic stagnation of the 1970s, the 1980 Bayh-Dole Act was a landmark bipartisan bill that facilitated follow-on private sector development of early government-funded research. It allowed innovators to retain ownership of patents when recipients of federal funding would have reflexively assigned intellectual property rights to the relevant agency. Predictably, Bayh-Dole catalyzed an explosion of federally funded research over the past 40 years, contributing $1.3 trillion to national output and supporting 4.2 million American jobs.
There is a caveat. Bayh-Dole allows the government — under certain circumstances — to reclaim patent rights through what are termed “march-in rights.” Bayh-Dole did not, however, sanction march-in rights solely on the basis of price — precisely what the Biden-Harris administration has now proposed in an effort that ignores congressional intent. Exercising march-in rights would undermine the bedrock of our national intellectual property system. Even the National Institutes of Health, the nation’s largest public funder of biomedical research, declined to use this authority in 1997, 2004, and again in 2023, declaring that “the extraordinary remedy of march-in is not an appropriate means of controlling prices.”
In a single stroke, price-triggered march-in rights would kneecap American biomedical innovation on a monumental scale. Universities, research institutions, and startups would think twice before accepting federal funding and limit their R&D budgets accordingly. With the National Cancer Institute alone awarding over $5 billion in cancer research grants in 2022, patients and their families are the ones who would pay the biggest price from lost innovation.
Sadly, this is not all. With Halloween just around the corner, under the Biden-Harris administration regulatory zombies lie in wait for many life science innovators. Earlier this year, the FDA resurrected its latent authority to regulate laboratory-developed tests (LDTs) as traditional medical devices. After nearly half a century of exercising enforcement discretion, while failing to make a case for widespread medical risk, the FDA chose to both avoid compromise and subvert the will of Congress — instead acting independently to thwart clinicians by limiting the availability of diagnostic tests.
Diagnostic error is a longstanding clinical problem impacting patients, with the National Academy of Medicine 2015 report on “Improving Diagnosis in Health Care” estimating that over 20% of medical malpractice cases were associated with diagnostic error. Delayed or incorrect diagnosis can also be deadly, with a review of autopsies indicating that 10.2% of patients experienced diagnostic errors that may have affected their clinical outcome. The American Hospital Association reporting that one health system alone had over 1,600 LDTs that would face $8 million in regulatory fees, while another developed 150 new LDTs in a year. The FDA’s LDT rule destroys bottom-up clinical innovation that would improve clinical performance for patients.
The past four years have been marked by a relentless campaign against scientific and clinical innovation. With the health care delivery industry suffering from centralized payment and overregulation, life sciences innovation remains a bright spot for Americans seeking a healthier and more independent life. It’s critical that we protect it.
Dr. Vrushab Gowda is a clinical fellow at Harvard Medical School. Dr. Brian J. Miller is a nonresident fellow at the American Enterprise Institute and an associate professor of medicine at the Johns Hopkins University School of Medicine.