WASHINGTON, DC - Representative Dan Crenshaw (R-TX) is joining Energy and Commerce Republican Leader Greg Walden (R-OR) for a video series that began this week aimed at providing the facts on Speaker Pelosi’s partisan plan for fewer cures.
In the second video in the series released today, titled “Tax on Cures & Impact on Innovators," Walden and Crenshaw discuss how the 95% tax on cures - billed as a “negotiation" in Speaker Pelosi’s plan - will destroy the innovation so many Americans rely on for hope.
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Full Transcript
Crenshaw: So, if we’re going to get to those better ways, but there’s more to H.R. 3 than, I think the misconception that it’s a negotiation, it’s really price setting and all the problems that that creates with fewer cures, it’s also sort of vindictive in that way. So tell me about the tax, there’s a potential 95% tax if a manufacturer refuses to negotiate.
Walden: Yeah, let’s just start with the term ‘negotiation.’ Everybody loves the IRS. This makes the IRS look like a piker because negotiation is ‘Dan, here’s what I’m going to pay you for the drug, within this range of what you sell it for in some other country. Oh, if you don’t agree to what I tell you I’m going to pay you for it within that range, then I’m going to tax your revenues, starting in the first quarter, your revenue 65%.
Crenshaw: Revenue, you mean profits?
Walden: Revenue, not profits. And I was a business owner for 20 years, there is a big difference between revenues and profits. And so, they say 65% in the first quarter and by the third quarter that year, 95% of your revenues.
Crenshaw: What incentive would you have to do anything?
Walden: No, that’s called a negotiation. And by the way, this affects anywhere else you sell your drug in America. If you won’t play with me anywhere on Medicare, then whatever your revenue stream is. So, what do you think happens then? They’re either going to capitulate or they’re going to find knock-off drugs that make them a lot of money and keep going down that path and not after these ones we really want them to focus on like an Alzheimer’s, an ALS and things of that nature.
Crenshaw: Here’s the big question, who does this hurt the most? Is it hurting big pharma because it’s pretty popular nowadays to hate on big pharma. But is this really hurting them because what they’re doing nowadays is they’re seeing innovation in the biotech industry, small kind of start-ups. It’s a good system.
Walden: That’s who it hurts.
Crenshaw: That’s who it hurts but they’re the ones actually creating a start-up, they’re going in massive amounts of debt because they care. You know, they care about the next cure and if they look good, they’ll get bought up by big pharma. It’s kind of the way Silicon Valley works.
Walden: I was just going to say; doesn’t that sound a lot like a couple of guys in a garage that created Apple?
Crenshaw: That’s what’s happening, and it’s a good thing but I’m not sure what the incentive would be if this happened.
Walden: You have to have investors who are willing to take high risk on a start-up in the hopes they come up with a cure and most of the medicines that go into the 10-15-year pipeline. Very few of them end up actually working. You got to recover your costs at some point. And if you get to that miracle drug, that new medicine, that cure and big government in Washington says, oh great, you’ve developed this thing, you’ve invented this thing, you have to sell it to us at this price or we’re going to tax your revenues. Aren’t you going to chase off investment and innovation? I think you will. There are independent analysts who study economics for their livelihood saying, I think they will. I don’t think you have to go there to get prices down.
Crenshaw: And big pharma, they’ll still make money because with what they do now is they’ll come out with version 2.0, version 3.0 of the same drugs. There’s no incentive to innovate for a new drug. They’ll do what they think they can make money on.
Walden: It’ll be the next knock-off, changed just enough that it’s new enough and they can launch something new, they got their patent protections. And by the way, patent protections are important, they’re in the Constitution, this is why America is such the innovator in the world.
Crenshaw: You need some kind of patent protection.
Walden: Right, you have to be able to recover if you invent something. The Apple iPhone, should the government come say, oh wait, if you’re selling that 20 bucks cheaper in Japan, we want that price, if not, we’re going to take your revenues. That’s what’s being proposed here.
Crenshaw: It’s a signal to future innovators, that’s the problem.
The third and fourth videos in the series, titled “HR 3 - Debunking the Dems" will be released next week.
Background
Speaker Pelosi’s partisan bill has sparked widespread concerns recently about the negative impact this bill would have on the small innovators developing and delivering new cures. ICYMI ⬇
* Axios Vitals: Pelosi’s drug pricing bill threatens biotechs
* San Diego Union-Tribune: Drug pricing bill will stop innovative new medicines, California trade groups say
* STAT News: In a rare political move, prominent biotech venture capitalists speak out against Pelosi’s drug pricing bill
FULL VIDEO SERIES
Watch each video in the #FewerCures Facts series using the links below:
1. “Impact on Cures"
