July 19, 2019

Industry, IP Experts Reveal Harmful Effects of IPI Model on Pharmaceutical Innovation


Research shows IPI model penalizes innovation and reduces access to life-saving drugs

WASHINGTON, D.C. – The U.S. Chamber of Commerce Global Innovation Policy Center (GIPC) held a roundtable event to discuss the negative impacts that the International Pricing Index (IPI) model would have on innovation in the pharmaceutical industry and patient access to breakthrough drugs. The discussion featured findings from an empirical study recently released by Vital Transformation, International Pricing Index: What Will be the Impact on Patients, Outcomes, and Innovation?

“Implementation of the IPI model will substantially reduce revenues of pharmaceutical companies by targeting the most advanced medicines, primarily those treating cancer and neurological disorders,” said Duane Schulthess, Managing Director at Vital Transformation. “As political and regulatory leaders in the U.S. consider importing the IPI model, they must recognize the consequences that stifled innovation at the hands of constrained research and development will have on patients, the healthcare system, and the economy more broadly.”

Revenue loss in the pharmaceutical industry can significantly impact the funds available for research and development (R&D) and limit access to new drugs and cures. The HHS claims that IPI will only lead to a 1% reduction in R&D, but research shows that if broadly applied, IPI will drive down R&D by 25% a year on average. Prior to the introduction of reference pricing, Europe invested 24% more in R&D than the U.S. in 1986; in 2018, Europe invested 40% less.

“Bringing the IPI model to the United States imports problems, not solutions,” said Patrick Kilbride, Senior Vice President of GIPC. “Our free-market health system has been the most innovative in the world, allowing Americans to reap the rewards of new life-saving treatments, high-paying jobs, and a stronger economy. The U.S. should not attempt to address prescription drug pricing at the expense of pharmaceutical research and, most importantly, patients.”

The speakers included Schulthess, Kilbride, Susan Peschin (President and CEO, Alliance for Aging Research), Katie Mahoney (Vice President, Health Policy, U.S. Chamber of Commerce), and Joseph Damond (Executive Vice President, International Affairs, BIO). The event follows a broader U.S. Chamber campaign on the IPI model.

“As policymakers work to lower the cost of prescription drugs, they need to consider the consequences that simplistic and short-sighted policies—like adopting foreign price controls—will have on patients and our ability to develop new cures and treatments,” BIO’s Joe Damond warned. “America’s patients have access to first-in-class, innovative medicines that patients in other countries often wait months and even years to access. Imposing foreign price controls on American innovation will slow the tremendous progress that’s been made fighting disease at the expense of patients in need.”

For more information, read the full study from Vital Transformation here: International Pricing Index: What Will be the Impact on Patients, Outcomes, and Innovation?

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