The Way Forward On Health Care, And No, It's Not ObamacareRepeal and replace—but also reinvigorate.
Douglas Holtz-Eakin, Paul Howard
September 29, 2010
The Republican "Pledge to America" promises to repeal the worst aspects of Obamacare. But Republicans should go further and build a bipartisan agenda for biomedical innovation.
Last Thursday, Congressional Republicans revealed a new "Pledge to America," including a promise to repeal and replace Obamacare with commonsense, fiscally sustainable health care reforms that will improve health care and expand access to affordable health insurance.
The Pledge is a sound and bold agenda for reform, starting with the repeal of Democrats' recently passed $1 trillion budget-busting, job killing, health care legislation. After rolling it back, Republicans would replace it with true interstate insurance competition, medical malpractice reform, expanded Health Savings Accounts, and improved high risk pools for patients with pre-existing conditions.
But Republicans should also promote a bipartisan agenda that will strengthen America's global leadership in the field of biomedical innovation. By creating a better climate for medical innovation today, policymakers will reap huge dividends from more high paying biotech jobs, new cures for life-threatening diseases, and new treatments that will help Americans remain healthier and more productive as they age—reducing the strain on government programs like Social Security and Medicare.
For decades, America has been the leader in global biomedical innovation—thanks to public support for basic medical research through the National Institutes of Health, robust intellectual property protection, and a relatively free market for new medical products, among other strengths. But U.S. leadership is eroding, challenged by rapidly advancing biotech sectors in India and China and undermined by a regulatory and political environment that too often sees new medicines as costs to be avoided.
A true innovation agenda would start with tax reform. The U.S. corporate tax rate (the world's highest, at nearly 40 percent) is a job-killer, encouraging companies to outsource jobs and manufacturing capacity to lower-tax countries. Reducing this rate so that it's closer to (or even better yet, lower than) the OECD average of 26 percent would be a powerful incentive for more companies to invest in biotechnology jobs and facilities in the United States.
Second, policymakers must find ways to keep more top scientific talent working here. India and China are making every effort to "repatriate" science students that train at U.S. universities—recognizing them as potential entrepreneurs who might start the next Genentech. As Senator Charles Schumer (D-N.Y.) and Lindsay Graham (R-S.C.) wrote in the Washington Post last March: "it makes no sense to educate the world's future inventors and entrepreneurs and then force them to leave when they are able to contribute to our economy." One of their proposals—to award automatic green cards to foreign students who earn a master's or Ph.D. in "hard" science fields like biology—could be implemented with very little cost to the federal budget.
Finally, we need to modernize the FDA and overcome the gap between the rapid advances in basic science and the dearth of innovative new drugs actually coming to market. Part of the problem, as the FDA's own leadership and science board has acknowledged, is that the agency is using 20th century regulatory tools to evaluate 21st century medicines. The result is a cumbersome and expensive process that can take a decade and cost hundreds of millions (or billions) of dollars to generate a single FDA-approved drug.
The FDA currently receives a paltry $18 million for advancing regulatory science, including for its food and veterinary centers. Compare that to the European Commission's Innovative Medicines Initiative, a $2.5 billion public-private partnership to advance the science of approving new medicines. Republicans should advocate for reforms to make FDA drug approvals faster and more predictable in return for a major funding increase for the FDA's regulatory science programs—an idea that Democrats should embrace.
Congress should also follow Europe's lead and fund a joint venture that can help revolutionize how we test and develop new medicines. Budget costs from increased funding for biomedical innovation can be offset in ways that also improve health—for instance, reducing obesity by slashing the billions in annual agricultural subsidies for corn byproducts that flood our grocery stores with cheap junk food.
By expanding their definition of health care reform to include a comprehensive innovation agenda, Republicans can attract support from Democrats and independents for maintaining U.S. leadership in a critical economic sector. Better yet, they can offer hope to millions of patients suffering from chronic and life-threatening illnesses that have few good treatment options today.
Paul Howard is a senior fellow at the Manhattan Institute and the director of its Center for Medical Progress. Douglas Holtz-Eakin is president of the American Action Forum and former director of the Congressional Budget Office.