South San Francisco, CA — December 14th, 2020 —
On November 27, 2020, the Trump Administration published the Most Favored Nation (MFN) Interim Final Rule with comment period establishing a drug pricing model that would cut provider reimbursement for Medicare Part B medicines to the lowest price available in “economically comparable” countries, plus a flat add-on fee, starting January 1, 2021.
The Trump Administration has characterized the implementation of the MFN Rule as a “test” through the Center for Medicare and Medicaid Innovation (CMMI). The role of CMMI is to test changes to the healthcare system with the goal of improving care delivery and addressing costs. However, this model will apply to 75% of drug spending under Medicare Part B, impacting all 50 states and most Part B providers, namely physician offices and hospital outpatient departments, including 340B hospitals. We believe this goes far beyond a “test” and is an overly broad and very dangerous way to experiment with any new idea.
As Genentech CEO Alexander Hardy notes, “We are disappointed that President Trump is prioritizing politics over meaningful, market-based reforms. The MFN model will cause irreparable harm to the economy, have a catastrophic impact on our ongoing ability to discover and develop breakthrough therapies and — most importantly — it will put patients’ lives in harm’s way by reducing access to life-changing medicines.”
By lowering physician reimbursement drastically, this rule will put providers at significant financial risk, leading to practices becoming unsustainable and ultimately risking patient access to medicines. This is doubly harmful at a time when providers are being pushed to the brink as we fight a surge of the COVID-19 pandemic in the United States.
Given the detrimental impact this model would have on patients, providers and our business, Genentech, along with industry trade associations, patient and provider groups, is taking all actions necessary to prevent this rule from being implemented. We believe the rule is unconstitutional and should be prevented from taking effect on January 1, 2021.
South San Francisco, CA — September 14th, 2020 —
Genentech has long advocated for — and proactively proposed — solutions that would significantly lower patient costs and save the government money, while at the same time maintaining America’s position as the global leader in the research, development and manufacturing of new innovative medicines. We are disappointed that President Trump’s executive order prioritizes politics — less than 60 days before the presidential election — over thoughtful, market-based approaches required to bring lasting, meaningful reform.
The executive order does nothing to address the foreign price controls that are at the root of the so-called “freeriding” by other countries. Instead, it brings to the U.S. market the same sort of price controls, resulting in annual losses of many billions of dollars of income that Genentech and other biopharmaceutical companies have traditionally invested in research and development, jobs and manufacturing. Last year alone, Roche and Genentech invested nearly $12 billion in research and development - more than any other healthcare company in the world.1
The free-market in the U.S. has allowed us to deliver cutting edge innovation to patients around the world. Imposing price controls in the U.S. will seriously harm U.S. leadership on medical innovation. The President's proposal will inevitably and unavoidably reduce future investment in the discovery and development of breakthrough therapies for cancer, neurological disorders, and many other diseases, as well as patient access to life-changing medicines. According to a study from President Trump’s own Council of Economic Advisors, if such policies were put in place, as many as 100 new life-savings medicines could be prevented from entering the U.S. market over the next decade - representing about one-third of all new medicines expected during that time.2 The decrease in scientific innovation could cost the biopharmaceutical industry up to $1 trillion over a ten-year period.2
It is especially troubling that the President would move forward with such a proposal at this time, as it will shift focus and resources away from all that the biopharmaceutical industry is doing in the fight against the global COVID-19 pandemic.
The order will dramatically impact the lives of American patients. Our citizens have long benefited from the country’s standing as the global leader in risk-taking and innovation, and have access to more medicines than in any other country. From 2000 to 2010, the U.S. was responsible for 57% of all new medicine approvals across the globe.3 Of the 74 cancer medicines launched between 2011 and 20184 worldwide, 96% are available in the U.S., whereas only 71% are available in the United Kingdom, 50% in Japan, and 11% in Greece.5 For some cancer medicines that are available in comparator countries, there is an 18-month average lag between the time they are available in the U.S. and availability elsewhere.5 Additionally, Ocrevus, which was approved over three years ago, is the only therapy approved by the U.S. Food and Drug Administration (FDA) and European Medicines Agency (EMA) for primary progressive multiple sclerosis. Despite being the standard of care in the U.S., it is not yet available in several European countries.6
The President’s plan to impose foreign price controls on the American health care system will bring irreparable harm to the American economy. It will result in job losses, reduced investment in manufacturing infrastructure, and reduced spending on research and development in the U.S. If such policies were put into place it would have a devastating impact on our economy with the permanent loss of more than 700,000 jobs across America.7 At the same time, investments in innovation will continue, if not increase, in other parts of the world — in countries which are eager to displace the U.S. as the scientific leader. Once U.S. leadership on medical innovation is lost, it will be difficult to regain.
The real tragedy is that there are solutions — ones that Genentech as well as other pharmaceutical companies have proposed — that would reduce patient costs and government spending but avoid the devastating impacts on U.S. innovation that come with the President’s price controls scheme. The President’s executive order was rushed and promulgated in such a way as to circumvent Congressional authority. Moreover, we are concerned that a final rule will be released without appropriate notice or even requiring a public comment period. It must be stopped.
Genentech has consistently engaged in conversations with current and previous Administrations, Congress, and policymakers across the country. It’s time to move beyond the rhetoric and implement durable solutions to ensure that Americans today and into the future receive appropriate and affordable care while encouraging ongoing innovation in health care.
Founded more than 40 years ago, Genentech is a leading biotechnology company that discovers, develops, manufactures and commercializes medicines to treat patients with serious and life-threatening medical conditions. The company, a member of the Roche Group, has headquarters in South San Francisco, California. For additional information about the company, please visit http://www.gene.com.