Today the CEO of Eli Lilly,Mr. Lechleiter, tweeted his comments on his fear that new governmental reform will stifle innovation. Below is a portion of his statement.
Biomedical innovation is not incompatible with the health-care reform goals of universal access, quality improvement and cost control. On the contrary, without new, more effective medicines — along with new devices and diagnostic tools, and better treatments and surgical techniques — it will be impossible for larger numbers of Americans to obtain better health care at a manageable cost.
So it is vital to all of us that we insist that reform proposals pass the “innovation test.” Providing insurance to millions of Americans through a government-run plan would fail the test. Similar efforts around the world have led to rationing of health care and created hurdles between patients and the most advanced treatments. On the other hand, innovation would remain reasonably secure if universal access were achieved through tax credits and government subsidies that allow patients to choose from a variety of private health-financing options.
Curtailing health-care costs by allowing the federal government to dictate prices for branded medicines also would fail the test. Price controls and rebate requirements tend to be arbitrary and make it much harder for innovators to attract and recoup investments. For their part, private insurers and patients tend to control costs by insisting on value — forcing companies to demonstrate how the effectiveness or broader savings generated by their product justifies its price. That approach maintains the incentives for innovation and is yet another reason not to crowd out the free market.
Proposed laws that could weaken the enforcement of patents on biotechnology products flunk the innovation test as well. Some in Congress want to leave the creators of new biotech medicines with only small periods of time in which to retain exclusive use of research-and-development and manufacturing-process data for these products. This might speed the arrival of copied versions of some medicines, but it would kill critical incentives to discover and develop them in the first place.
In contrast, the “Pathways to Biosimilars Act” now before Congress gets the mix right. It does this by giving innovators the time needed to recoup their research investments while defining a clear framework for legal copying of biotech products down the road. It strikes the right balance between innovation and competition.
Our legislators in Washington still have the power to keep innovation in the health-care reform script. Not doing so would be a true American tragedy.
Mr. Lechleiter is chairman and CEO of Eli Lilly & Co.