Dr. Munr Kazmir
4 min readAug 9, 2018

Health insurance costs in the United States have unfortunately continued to rise due to Obamacare and will do so in perpetuity until such time that it is fully repealed.

However, there are still steps we can take to lower drug prices and make medicine more affordable.

Thankfully, the administration has taken a major positive step in that direction with its Competitive Acquisition Program for tougher negotiation as it pertains to Medicare Part B.

Medicare is a huge part of the market as far as buying prescription drugs is concerned, so anything that can be done to drive those prices down would be a welcome change.

From the official HHS press release on the matter:

Today, the Centers for Medicare & Medicaid Services (CMS) delivered on President Trump’s promise to negotiate better deals for Medicare patients and create competition between drugs used to treat the same conditions, with more than half of the savings required to be passed on directly to patients. This action gives Medicare Advantage plans the option of applying step therapy for physician-administered and other Part B drugs and is an important step within the Administration’s larger agenda to provide patients with more choices when picking a Medicare Advantage plan that best meets their needs.

For the first time, CMS will provide Medicare Advantage plans — private health insurance plans that provide Medicare benefits to 20 million Medicare beneficiaries (a third of all beneficiaries in Medicare) — the option of negotiating for Part B drugs in a way that lowers costs and improves the quality of care. Medicare Advantage plans that also offer a Part D benefit will be able to cross-manage across Part B and Part D, so that patients receive the best medicine whether it is physician-administered or self-administered. CMS is also putting American Patients First by making sure that Medicare Advantage plans negotiate in a way that ensures patient choice and provides patient protections with guardrails, including that step therapy can only be applied to new prescriptions for patients who are not actively receiving a given medication.

This is a great start, but there are still many steps that need to be taken en route to bringing down prescription drug prices more broadly.

The next subject I would like to see tackled regarding this issue is patent reform.

The average drug in this country costs anywhere from a several hundred million to a few billion dollars to develop. Obviously, it is important that drug companies be allowed to patent the drugs they cultivate, because otherwise, there would be minimal financial incentive to spend all of the money it takes to bring those drugs to market.

The patent period lasts for 20 years, but that starts from the time the drug is invented, not the time it being sold. The average drug takes 8 years to come to market, meaning that in most cases, the developer of the drug has 12 years before they can face any competition.

While I understand that a significant period of time should be afforded to these companies so they can recoup their research and development costs, shaving a few years off of that could be very beneficial to consumers. The earlier availability of generic drugs would lower overall drug costs, especially for those who pay for their medicine out of pocket.

We also need to answer why we are subsidizing drug costs for much of the rest of the developed world.

The United States accounts for nearly 50% of R/D funding, yet the same drugs that cost so much in the United States are often close to 50% cheaper in other countries.

How can this be?

Basically, our country does not have tight price controls on these drugs, while others do. The result is that whatever costs drug companies cannot recoup from the countries with strict price controls gets dumped onto us, making our drugs much more expensive.

Many have suggested that a solution to this would be to adopt the same price control measures here, but that would mean the drug companies would have nowhere to recover their costs and it would lead to less innovation and fewer new drugs in the market since opportunities to make money would be far more scarce.

One interesting idea to combat this is to allow for the re-importation of drugs from Canada, where they are generally far cheaper than in the United States.

While this idea failed to pass in the Senate recently, it has created a very interesting alliance between progressive Senators like Vermont’s Bernie Sanders and Massachusetts’ Elizabeth Warren and libertarian-leaning Republicans like Kentucky’s Rand Paul and Arizona’s Jeff Flake.

Some have said this practice should not be allowed because there is potential for fraud and it would mean bypassing the FDA. Those are reasonable arguments and should not be dismissed out of hand.

However, it is worth considering the potential ramifications for Canada.

This practice would likely result in a Canadian drug shortage, which would mean they would be forced to raise prices somewhat and pay something closer to the true market share that they should have been paying for drugs all along.

And whether or not that re-importation bill is how we do it, getting other countries to pay their true market share for drugs so that drug companies don’t lean so heavily on us is a must if we are ever going to get fair pricing in the United States.

HHS has done something great here, but it should only be the beginning.

There is a long road ahead as far as fixing the cost of prescription drugs in the United States, but based on this action and previous ones, I am confident we have the right administration in place to carry out the changes that are so badly needed.