(Contributing Writer Brooke Bell)
“Over the past year, we’ve seen far too many examples of drug companies raising prices excessively for longstanding, lifesaving treatments with little or no new innovation or R&D. It’s time to move beyond talking about these price hikes and start acting to address them.” — Hillary Clinton, 2015
Republicans, Democrats, independents and political pundits of every persuasion are united today in celebration of a monumental step towards lowering prescription drug costs for Americans.
At least, they should be.
Progress in U.S. Healthcare Affordability
In a follow-up to the publication of “American Patients First: The Trump Administration Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs,” released in May, the White House issued a press release on Friday unveiling further plans to radically reduce the price of prescription drugs: “We are changing the entire system of how we pay for prescription drugs in this country. This president will continue to fight every day to put American patients first and bring down drug prices.”
The affordability of healthcare and high prescription costs, long the darling of Democratic political campaigns, and a particular hot-button topic during the contentious presidential race, remains voters’ top concern, according to recent polls. While the Affordable Care Act, passed in 2010, helped extend health insurance coverage to some without it, it did nothing to address the way prescription drugs are priced and sold.
Changing What the Market Will Bear
Currently in the United States, once a drug receives approval from the FDA, the pharmaceutical company can charge whatever it wants and Medicare, required to cover all FDA approved drugs, is obligated to pay. Generally, the drug companies will charge as much as the U.S. market will bear.
Trump’s plan proposes to link the costs of prescription drugs to an index of what other industrialized nations pay, essentially changing what the U.S. market is willing bear in terms of drug costs. Exactly what liberal lawmakers and left-leaning politicos have been clamoring for. Will it finally force the pharmaceutical industry to confront its out-of-control drug pricing at the expense of American patients?
Prescription Drugs: Why Americans Pay More
“This happens because the [U.S] government pays whatever price the companies set without any negotiation whatsoever. Not anymore,” President Trump said in a speech at the Department of Health and Human Services.
How much more do Americans pay for prescription drugs?
“Per capita prescription drug spending in the United States exceeds that in all other countries, largely driven by brand-name drug prices that have been increasing in recent years at rates far beyond the consumer price index. In 2013, per capita spending on prescription drugs was $858 compared with an average of $400 for 19 other industrialized nations,” according to Aaron S. Kesselheim, Jerry Avorn, and Ameet Sarpatwar.
In addition, a comprehensive government study, released just prior to Trump’s Friday October 25, 2018 announcement, found that Medicare pays 80% more than other advanced industrialized nations for some of the most expensive prescription drugs.
For the main analysis, we included 27 different drugs. In total, this accounts for $17 billion — a majority of Part B spending on drugs. Among these drugs, on average, the US pays 180% more than the international price. And in some cases, more than 400% the international average.
So, why do Americans pay so much more? The jury is in.
Researchers at Harvard Medical School reviewed thousands of studies from January 2005 through July 2016 in order to understand and explain what is causing higher drug prices for Americans. Their ground-breaking findings, published in August in the Journal of the American Medical Association, provide several critical insights, including problems the Trump Blueprint directly addresses.
The “most important factor” driving drug prices higher in the U.S. is the existence of exclusive, preferential “monopoly” rights for drug manufacturers. Drug manufacturers in the U.S. set their own prices; in other industrialized nations, they do not.
Drug manufacturers are gaming the patent system, extending patents by slightly altering non-therapeutic aspects of drugs, such as pill coatings, and paying out large “pay for delay” settlements in order to prevent or delay generics from being brought to market.
Putting American Patients First
The purpose of the U.S. Department of Health and Human Services.
American Patients First. What else should fall under the purview of the U.S. Department of Health and Human Services? Can we all agree that the agency is not to be held responsible for, nor is it equipped to encompass, all the needs of medical patients around the globe?
The healthcare needs of patients around the world are already being served and overseen by a number of international organizations dedicated to global health including the WHO, Pan American Health Organization and even the World Bank- just to name a few. The United States plays its part.
The U.S. Department of Health and Human Services concerning itself with American patients doesn’t hurt patients in other countries, either. As critics of the healthcare system in America are fond of pointing out, other industrialized nations like Great Britain and Canada already have robust systems in place to prevent their citizens from being over-charged by pharmaceutical companies.
Drug Manufacturers Aren’t Going Quietly
Not everyone is happy. Pharmaceutical companies are already marshaling the same old arguments they have used for a decades to justify skyrocketing U.S. drug prices.
“The U.S. has a competitive marketplace that works to control costs while encouraging the development of new treatments and cures,” Holly Campbell, spokesperson for the Pharmaceutical Research and Manufacturers of America, a trade association known as PhRMA.
But one of the industries most cherished and oft repeated reasons for higher U.S. drug prices, that of the high costs associated with research and development, hasn’t held up well under the scrutiny of the recent Harvard Medical School meta-study: “Most of the time, scientific research that leads to new drugs is funded by the National Institutes of Health via federal grants. If not, it’s often funded by venture capital. For example, sofosbuvir, a drug that treats hepatitis C, was acquired by Gilead after the original research occurred in academic labs.”
In spite of this, amid public outcry over certain high-priced drugs (pharmaceutical giant Mylan raising the price of the life-saving EpiPen from $94 in 2007 to $608 in 2016, for example.) and under pressure from lawmakers, drug manufacturers have not lowered prices. Why not?
“The answer is, you don’t want to be the first one who caves. They’re worried that it will start a chain effect. And really, they don’t have to do it. That’s the disturbing part of all of this,” Ameet Sarpatwari, epidemiologist at Brigham and Women’s Hospital, in an interview with Business Insider.
Maybe not anymore.