Drug Prices: Finally. Something Everyone Agrees On
Anyone who relies on prescription drugs or cares for someone who does knows that drug prices are soaring. The average annual cost of a brand-name drug has more than tripled in the past decade. Older adults take an average of 4.5 medications each month, which can add up to a total retail cost of more than $30,000 a year for brand-name drugs.
Strong patent laws plus limited pricing regulation over for-profit pharmaceutical companies mean these companies are pretty much free to charge whatever they want for the medicines they offer.
So why is it different now?
Prices are so out of control that even in our historically divided Congress, Democrats and Republicans actually have found something to agree on.
The AARP believes that a combination of tactics can bring drug prices under control, including giving the federal government the ability to negotiate when buying drugs.
It also includes legalizing the safe importation of drugs sold at lower prices in other countries and capping patients’ out-of-pocket costs.
A final approach is to change patent rules in place now and allow manufacturers of brand-name pharmaceuticals to freeze out competition from generic alternatives that could lower prices.
AARP has launched Stop Rx Greed
This is a national campaign to persuade federal and state lawmakers to take action on the issue. The campaign includes lobbying efforts, consumer-information programs and the release of new research about drug prices.
We’re the only nation in the world that doesn’t negotiate the price of drugs
The U.S. has the highest prescriptions drug costs in the world. One reason is that we’re the only industrialized nation whose government doesn’t bargain with drugmakers over pricing.
Australia, Japan and most European nations have some form of a national health program with drug review boards that negotiate with manufacturers. They analyze whether a new drug is more effective than its previous incarnations, or simply a slightly modified version. They’re often able to negotiate significant discounts because they can walk away if companies won’t cooperate.
A quick example: The asthma medication Advair costs $310/month in the US; it’s $38 in Germany. The list is endless and it breaks your heart. Especially when you read about people who are dying because they can’t afford their medications.
Proposed solutions to lowering drug prices
Let Medicare negotiate directly with drugmakers.
Give Medicare Part D plans more flexibility in creating their lists of covered drugs.
Leverage a drug’s price in other countries to identify the price here.
Let’s keep this in mind: Even as Advair’s $38 pricetag in Germany is a fraction of what it costs here at home, the drugmakers are still making money.
Prices are lower elsewhere, specifically Canada. Why not import those?
Tempting, but there’s a very good reason why we can’t just import all of our drugs from Canada, where prescription drugs cost 33% less than in the U.S. It’s illegal, though you likely know someone who gets his/her meds from Canada and has been doing it for years.
Proposed legislation would let patients buy lower-priced medicines from Canadian pharmacies for personal use. Critics say this would lead to harmful counterfeits. But there are ways to institute safeguards. The FDA has already safely imported drugs to address critical shortages. And more than 40% of drugs, both brand-name and generic, are made overseas.
The problem: 20 years of patents before generics can hit the marketplace
At the bottom of all of this is the long, expensive development cycle to get a drug on the market. To encourage innovation and allow pharmaceutical companies to recoup their expenses, the federal government grants 20-year patents on new drugs that give companies the exclusive right to market the medication.
Because it takes years to get the drug to market, manufacturers end up with a monopoly
They do everything they can, including making insignificant tweaks to the meds to extend those patents and prevent generics from entering the market. In 2012, the GAO estimated that generics had saved the U.S. health care system $1 trillion during the previous decade. By extending these patents, big pharma is preventing consumers from accessing affordable healthcare.
So whom should we believe?
Big Pharma justifies high drug prices to cover the costs of research and development at $2.6B/ drug. But wait. Virtually all of today’s new drugs, such as blockbuster immunotherapies for cancer, have roots in government-funded research at the National Institutes of Health or leading academic centers across the country. Every one of the 210 new drugs approved by the FDA between 2010 and 2016 began life in NIH-funded labs, representing grant funding totaling more than $100B, a 2018 report by researchers at Bentley University reveals. That’s right. This is publicly funded research—it’s not coming out of the pockets of the drug companies.
Drug companies rarely, if ever, pursue these fishing expeditions of basic research, the stuff that might one day lead to a breakthrough drug but doesn’t have an immediate payoff. That work is increasingly funded by taxpayers.
Policy makers are considering a variety of options, such as demanding a higher return on investment for taxpayer-funded research that is ultimately commercialized, or allowing the government to control the patents of drugmakers that charge unreasonably high prices.
Limits on out-of-pocket costs. Cap out-of-pocket drug costs for Medicare Part D enrollees.
Value-based pricing. Right now, a drug’s pricetag often bears no relationship to its clinical benefits. How do you distinguish a genuine advance from a mild improvement?
More enlightened consumer education
As part of its drug-pricing blueprint, HHS is calling for increased price transparencyso consumers can make more informed decisions.
Medicare and Medicaid have updated their pricing dashboards.
Congress passed an anti-gag clause allowing pharmacists to tell consumers about drugs that are more affordable than ones they’ve been prescribed.
Drugmakers are being encouraged to include list prices in their direct-to-consumer advertising.
The bottom line:“Real people suffering from real diseases should not have to beg, borrow or steal to control their diseases,” says Rena Conti, associate research director of biopharma and public policy for the Institute for Health System Innovation and Policy at Boston University.
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