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November 27, 2018


The Honorable Alex Azar


Department of Health and Human Services

200 Independence Avenue SW

Washington, DC 20201


Dear Secretary Azar:


We write in opposition to the administration’s Advanced Notice of Proposed Rule Making (ANPRM) to create an “International Pricing Index” (IPI) payment model for drugs administered under Medicare Part B.


The proposed payment model imports foreign price controls into the U.S. by modifying the Part B reimbursement rate so that it is calculated based off the prices set by 14 countries.


Instead of relying on government price setting, Medicare Part B is currently calculated based on market prices. The formula, which is based on the “Average Sales Price” (ASP) in the U.S. market, includes the discounts negotiated between payers, hospitals and health plans. Recently this system led to a 0.8 percent decrease in the cost of the top 50 Part B drugs.


In contrast, foreign countries frequently utilize a range of arbitrary and market-distorting policies to determine the cost of medicines – by definition such approaches are price controls. There is no negotiation and foreign governments often force innovators to accept lower prices in a “take-it-or-leave it” proposition. This results in reduced or restricted access to new medicines and higher prices for those medicines that enter the market.


Conservatives have long opposed price controls because they utilize government power to forcefully lower costs in a way that distorts the economically-efficient behavior and natural incentives created by the free market.


When imposed on medicines, price controls suppress innovation and access to new medicines. This deters the development and supply of new life saving and life improving medicines to the determent of consumers, patients, and doctors.


The U.S. is a world leader in research & development because the system of healthcare rejects price controls and encourages innovation. As a result, a majority of new medicines are developed and launched in America.


This innovative environment is enormously beneficial to the long-term well-being of Americans and the efficiency of the U.S. healthcare system. In addition, the investment required for research and development of medicines leads to more high-paying jobs and a stronger economy.


Importing price controls will undermine this system by basing U.S. prices on the prices of socialized foreign healthcare systems. This will inevitably suppress innovation and harm American competitiveness.


Ironically, the administration recognized the damage that adopting foreign pricing would have on American innovation in a report released in February 2018 by the president’s Council of Economic Advisors:


 “If the United States had adopted the centralized drug pricing policy in other developed nations twenty years ago, then the world may not have highly valuable treatments for diseases that required significant investment.”


We are also concerned that the IPI is being proposed through the Obamacare Center for Medicare and Medicaid Innovation (CMMI). There is long standing conservative opposition to CMMI based on the concern that it bypasses Congress’ power over the purse as enshrined in Article I of the Constitution.


CMMI is completely exempt from the Congressional appropriations process and is prone to being misused in ways that result in the executive branch of government usurping Congress’ role in setting policy.


The administration has repeatedly acknowledged that foreign price controls have damaged medical innovation.


Instead of fighting these price controls, we are concerned that the proposed International Pricing Index adopts them. This proposal will suppress competition and innovation and harm American competitiveness and investment.


We respectfully request that your department withdraw this proposal.




Grover Norquist

President, Americans for Tax Reform


James L. Martin

Founder/Chairman, 60 Plus Association


Saulius “Saul” Anuzis

President, 60 Plus Association


Dick Patten

President, American Business Defense Council


Phil Kerpen

President, American Commitment


Dan Schneider

Executive Director, American Conservative Union


Steve Pociask

President, American Consumer Institute


Lisa B. Nelson

CEO, American Legislative Exchange Council


Dee Stewart

President, Americans for a Balanced Budget


Rick Manning

President, Americans for Limited Government


Andrew F. Quinlan

President, Center for Freedom and Prosperity


Ryan Ellis

President, Center for a Free Economy


Jeffrey Mazzella

President, Center for Individual Freedom


Ginevra Joyce-Myers

Executive Director, Center for Innovation and Free Enterprise


Peter J. Pitts

President and Co-founder, Center for Medicine in the Public Interest


Thomas Schatz

President, Citizens Against Government Waste


Chip Faulkner

Chair, Citizens for Limited Taxation


Iain Murray

Vice President for Strategy, Competitive Enterprise Institute


Matthew Kandrach

President, Consumer Action for a Strong Economy (CASE)


Fred Roder

Health Economist/Managing Director, Consumer Choice Center


Yaël Ossowski

Deputy Director, Consumer Choice Center


James Edwards

Executive Director, Conservatives for Property Rights


Joel White

President, Council for Affordable Health Coverage


Katie McAuliffe

Executive Director, Digital Liberty


Robert Roper

President, Ethan Allen Institute


Palmer Schoening

President, Family Business Coalition


Richard Watson

Co-Chair, Florida Center-right Coalition


Adam Brandon

President, FreedomWorks


George Landrith

President, Frontiers of Freedom


Grace-Marie Turner

President, Galen Institute


Naomi Lopez Bauman

Director of Healthcare Policy, Goldwater Institute


Mario H. Lopez

President, Hispanic Leadership Fund


Linda Gorman

Health Care Policy Center Director, Independence Institute


Carrie Lukas

President, Independent Women’s Forum


Heather R Higgins

CEO, Independent Women’s Voice


Tom Giovanetti

President, Institute for Policy Innovation


Colin Hanna

President, Let Freedom Ring


Seton Motley

President, Less Government


Mary Adams

Chair, Maine Center-right Coalition


Charles Sauer

Founder/President, Market Institute


Kevin Waterman

Co-Chair, Maryland Center-right Coalition


Ted Tripp

Chair, Massachusetts Center-right Coalition


Tim Jones

Chair, Missouri Center-right Coalition

Former Speaker, Missouri House of Representatives


Pete Sepp

President, National Taxpayers Union


Stephen Stepanek

Co-Chair, New Hampshire Center-right Coalition


Jack Boyle

Executive Director, Ohioans for Tax Reform


Jeff Kropf

President, Oregon Capitol Watch Foundation


Sally Pipes

President, Pacific Research Institute


Ed Martin

President, Phyllis Schlafly Eagles


Lorenzo Montanari

Executive Director, Property Rights Alliance


Paul Gessing

President, Rio Grande Foundation


Karen Kerrigan

President/CEO, Small Business & Entrepreneurship Council


David Williams

President, Taxpayers Protection Alliance


Sara Croom

Executive Director, Trade Alliance to Promote Prosperity


C. Preston Noell III

President, Tradition, Family, Property, Inc.