EDITORIAL: American medicine is the best, but its shortcomings are real

OPINION:

American medicine is the best in the world, so an ancient bit of wisdom goes, “just don’t get sick.” American medical innovations are unmatched anywhere in the world, and when the rich get really, really sick the United States is where they come. The politicians who keep trying to “fix” the system’s shortcomings — and they’re real — haven’t yet managed to destroy the system. But they’re coming close.

Ours is not an era of compassion and co-operation; Democrats and Republicans must recognize the system is flawed and the criticisms of both Democrats and Republicans are often valid. What we have is an awkward and clunky amalgamation of private industry and invasive government regulation that keeps driving prices up and access down.

All that needs to be fixed can be fixed, but not at the price of the United States’ position as the world leader in health care innovation. The U.S. boasts more clinical trials and produces more pharmaceutical drugs than any other country or group of countries. The struggle to contain costs has not damaged America’s reputation as the leader of medical discovery, from which everyone benefits.

The shortcomings must be addressed, but problem-solvers must be wary of creating new side-effects with the cure. There’s no consensus on how to unpack the Obamacare mess or the problems that came before it, and some proposed solutions would makes things worse. One of those is H.R. 107, introduced by U.S. Rep. Michael Burgess, Texas Republican. His legislation is designed to reduce health care expenditures by amending the current Medicaid system. If enacted, H.R. 107 might do a lot of things, but none likely would lower costs and the industry’s gifts of innovation would surely suffer.

Medicaid was created to help low-income Americans pay for health care, and, along with it, implemented legislation known as the Best Price Rule to ensure that every company participating in the program would sell its products to the government at the best price available. However, given that many drugs are offered to the federal government through discounts and a system of rebates, the rule caps the rebate at 100 percent of the average manufacturer’s price.

H.R. 107 would lift the rebate cap, creating the possibility that manufacturers dealing with Medicaid would lose money on some or all their transactions. Supporters of H.R. 107 say lifting the rebate cap would save money, but if it does it would do so only by shifting costs to innovators and consumers. That might be great for bureaucrats in green eyeshades attempting to balance budget accounts, but it would be tough on, for example, a family of five paying for insurance. To cover losses imposed by the law, drug companies would raise their prices for private insurance companies. These companies would in turn raise the price of premiums. Nothing solved.

Implementing the legislation of H.R. 107 would be troublesome enough, but the true tragedy would be the effect on innovation. Several private organizations, including the Epilepsy Alliance and HEALS, a hepatitis awareness campaign, oppose lifting the Medicaid rebate cap. These are organizations that understand the value of medical innovation, as well as the real risks posed to their members, for whom innovation is not theoretical if the drive to research new treatments is stripped away.

H.R. 107 would reduce the incentives for drug manufacturers to create new treatments, especially for diseases disproportionately suffered by Medicaid patients. Since these manufacturers would effectively lose money by investing in therapies primarily used by Medicaid patients, they would be discouraged from putting time, money and manpower into developing new treatments. Medicaid recipients with chronic conditions like epilepsy, hepatitis and diabetes — among the most vulnerable among us — would be further harmed as pharmaceutical innovation would halt.

Weakening the drive to research new, effective forms of treatment was not the intent of Rep. Michael Burgess, who is making a good faith effort to help fix the shortcomings of the American medical system, but that is the implication of H.R. 107, and the implication is too severe to ignore.