Price-Setting Policies: A Threat to Innovation & Patient Access

New Jersey plays a pivotal role among U.S. states in driving medical innovation and ensuring patient access to life-saving treatments. This leadership also makes the Garden State particularly vulnerable to policies that threaten the vitality of its life sciences sector. As one of the world’s foremost biomedical hubs, New Jersey will feel the impact of drug price-setting measures more acutely — which will shape the trajectory of healthcare delivery and scientific advancement for years to come. 

The Dangers of Price Controls 

Although proponents argue that government-imposed price controls on prescription drugs help reduce healthcare costs, such policies often have unintended consequences — undermining innovation and limiting Patient access to new treatments. Government intervention in healthcare pricing can weaken the economic incentives that fuel medical research and development. Therefore, the stakes couldn’t be higher for New Jersey, where the life sciences sector employs thousands and contributes billions to the U.S. economy. Biopharmaceutical companies with a footprint in our State represent an innovation powerhouse, with over 5,400 life sciences establishments developing groundbreaking treatments that support Patients worldwide.  

For the many families waiting for a cure, stalling innovation can mean ongoing stress, lower quality of life or a lack of any viable treatment option altogether. Furthermore, price controls can adversely affect Patient access to treatments currently on the market, by increasing access barriers through the practices of health system middlemen and complicating the Patient journey to care.  

New Proposals Don’t Favor American Industries 

President Trump’s recently introduced “Most Favored Nation” Executive Order aims to introduce international reference pricing for treatments in Medicare and Medicaid, a concerning approach that threatens the health of so many at risk populations as well as the entire life sciences industry. Most Favored Nation (MFN) looks to tie the prices of medications in the U.S. to the lowest prices paid for those same drugs in other countries. New details on the proposal show that the U.S. plans to set drug prices based on benchmarks from nations with a per capita GDP of at least 60% of that of the U.S. This approach fails to account for the nuances and significant differences in healthcare systems, economies, and innovation ecosystems around the world. 

While MFN may contain costs for the federal government in the short-term, the implications on Patient access will be significant and long-lasting. In the United States, 87% of new medicines are available within three months, compared to 63% in Germany and 59% in the U.K. Delays in treatment availability mean that Patients and their families wait longer for treatment, face worse health outcomes and ultimately pay greater healthcare costs. Instead of addressing factors driving up Patients’ out-of-pocket costs, such as pharmacy benefit manager (PBM) practices and copay accumulators policies, MFN risks importing access challenges seen in other countries and losing American life sciences leadership on the global stage. 

Impact of the Inflation Reduction Act 

The Medicare Drug Price Negotiation Program (MDPNP) – established by the passage of the Inflation Reduction Act (IRA) – is another example of how drug price setting stunts innovation and fails to address the true drivers of cost for Patients. The MDPNP claims to lower Patient costs and reduce Medicare spending by empowering the federal government to negotiate directly with biopharmaceutical manufacturers. In practice, the program has complicated access to the drugs subject to negotiation and created new challenges for innovation, particularly in the development of treatments and cures for rare diseases.  

Rather than pursuing measures that jeopardize future treatments without effectively addressing the challenges Patients face, policymakers should focus on targeted reforms that preserve innovation while making care more affordable.

A Path Forward: Common-Sense Reforms 

One such reform aimed at mitigating the negative impacts of the MDPNP on Patients is the Ensuring Patient Innovation and Cost Efficiency Act (EPIC Act). The law addresses a flaw within the IRA that created a discrepancy for when small-molecule drugs, typically taken as a pill or syrup, and biologics, frequently administered by infusion, are eligible for federal price negotiations. Small molecules are preferred by many Patients for their ability to be taken at home and their unique clinical benefit – yet the IRA disincentivizes their development by making them eligible for negotiation four years earlier than biologics. The EPIC Act would align negotiation timelines for small and large molecule drugs, ensuring consistent incentives for developing medicines and continued access for the Patients who rely on them.  

Similarly, the ORPHAN Cures Act aims to preserve the development pipeline for rare disease treatments by exempting orphan drugs – treatments for conditions affecting fewer than 200,000 Americans – from IRA negotiation requirements during a period of orphan drug exclusivity. This reform would protect investment in rare disease treatments and gives hope to vulnerable Patient populations who are waiting for new therapies. There are more than 7,000 rare diseases with fewer than 10% having an FDA-approved treatment. The ORPHAN Cures Act was included in the One Big Beautiful Bill Act recently passed by the House of Representatives – a critical step forward in safeguarding access to treatments for rare diseases.  

These bills, now under consideration in Congress, exemplify the kind of targeted reforms that strengthen Patient access while helping to offset the unintended consequences of the IRA — safeguarding medical innovation, preserving U.S. leadership in the life sciences and protecting access to future treatments. 

Only through thoughtful reforms, rather than blunt price controls, can our lawmakers lead the way toward a healthcare landscape that delivers both breakthrough innovations and sustainable access for Patients. As a global life sciences leader, the Garden State can play a pivotal role in supporting Patients in need and ensuring U.S. leadership in a vital industry. Our State’s biopharmaceutical and life sciences sectors don’t just produce medicines – they produce hope for Patients facing life-threatening and chronic conditions everywhere. 

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