It sounds great, finally, a plan to stem the tide of out-of-control drug prices. On Friday, May 11, President Donald Trump unveiled a 44-page document, his “American Patients First” plan. It immediately caused drug company and pharmacy benefit stocks to surge.
Consumers were enthusiastically wide-eyed with his new “blueprint,” no surprise since 80 percent of us perceive prescription drug costs as “unreasonable,” according to the latest Kaiser Tracking Poll. A 2016 poll cited 19 million Americans importing medication to save money. One in four Americans says paying for their drugs really is a financial stretch.
Opinions about the plan’s promise have evoked a variety of thought-provoking responses. Most agree — and hope — that it will change future drug prices, which are much higher than in other countries.
Reuters found that for the 20 top-selling medicines, the United States pays three times more than Britain, six times more than Brazil and 16 times more than India. The latest number reports prescription drug spending at $328.6 billion in 2016.
Not So Fast
A drug-price sea change isn’t going to happen overnight, confirmed Health and Human Services (HHS) Secretary Alex Azar. “It will take time to reorder an entire complex multibillion-dollar system,” he says. Azar was formerly the president of Eli Lilly’s U.S. operations — the company is ranked 12th in revenues.
Azar cited “four major challenges”:
- high list prices for drugs
- seniors and government programs overpaying for drugs due to lack of the latest negotiation tools
- high and rising out-of-pocket costs for consumers
- and foreign governments free-riding off of American investment in innovation
The plan sets two basic types of reform: changes by the administration and changes by Congress.
Talk of the Town
At USA Today, Andy Slavitt labeled the plan a “huge relief for drug companies. There were no calls for negotiation or drug re-importation.” That means they escaped basically unscathed, and there is still no ability to negotiate drug prices by Medicare, payers, and other pharmacy benefits management programs which protects profits and hurts consumers, he says.
Call it as it is: Medicare is forbidden to negotiate drug prices. Other countries’ national health services can bargain drug prices to under half the amount paid by Medicare here: Australia and the United Kingdom are just two.
Why is Medicare forbidden turf? The Pharmaceutical Research and Manufacturers of America (PhRMA) lobbied to the tune of almost $26 million in 2017 and wants nothing to do with negotiations of Medicare prices.
Its CEO Stephen J. Ubl wrote that: “The proposed changes to Medicare Part D could undermine the existing structure of the program that has successfully held down costs and provided seniors with access to comprehensive prescription drug coverage. We also must avoid changes to Medicare Part B that could raise costs for seniors and limit their access to lifesaving treatments.”
One of the nation’s largest company, Johnson & Johnson CEO Alex Gorsky shared that he doesn’t seem concerned about wreathing any drug-plan storm. In a shrouded statement, he warned the administration to beware “unintended consequences” on this complex system.
A few key points in the plan have merited general applause, including that drug list prices be disclosed in those incessant TV ads; that biosimilars be developed — generics for cancer, for example; and that changes. like those Ubel admonished, alter how hospital and physician-administered drugs are paid for under Part B.
So why are drug prices so high here anyway? Maybe because, as the Tufts Center for the Study of Drug Development acknowledges, it costs on average $2.6 billion for market approval of a prescription drug.
To Every Action, There’s a Reaction
As expected, AARP laments that the world’s highest prescription drug prices hurt everyone, especially seniors, who on average take 4.5 medications a month. Refusing to let Pharma off the hook, it says it hopes to introduce proposals to lower prescription drug costs that don’t simply shift the costs around in the health care system without addressing prices set by pharmaceutical companies.
At Stat News, Charles Silver suggests that seniors should decide the drugs they want and how much they will pay for them. Put Medicare on a fixed budget, then give program dollars to eligible seniors who decide how to spend them, he says.
Why isn’t the U.S. more hard-nosed? Vox’s Sarah Klliff points to the regulatory system surrounding pharma and the irony that it doesn’t regulate or negotiate new-drug pricing as other countries do. When drug companies price at will — they will price high.
Then there’s the “trade-off.” If pharma drug profits dive, investors won’t love that. Then less investment in new drugs means less research to find cures. When that happens, people suffer (more).
Drugs with a Guarantee
The New York Times’ Katie Thomas lauded Trump’s plans “to allow Medicare drug plans to pay different amounts for the same drug, depending upon the illness involved,” along with “value-based purchasing” — really a commonsense, money-back guarantee. Persuading other countries to do more (for a change) is an attractive option, as is allowing pharmacists to suggest times when cash, versus insurance, would be cheaper for customers.
Also, the patent system should sit up and take notice that it should reward innovation, but not protect unfair monopolies. Those rebates from drug companies to insurers and employers are under the microscope: Are they ethical or illegal kickbacks?
Earl “Buddy” Carter (R-GA), a licensed pharmacist, told Fox News that Trump was “spot on,” but “Admittedly, the devil’s in the details.” Carter says that that drug pricing needs transparency since it is “opaque.” The interviewer talked about gauging, and Carter hesitated, but said, “That’s a pretty strong word. But if I’m having to pay half of my salary on a drug that’s saving my life, then I’m probably going to use that word, you’re right.” He stressed the need for cooperation in Congress “to get this done.”
That’s where the rubber meets the road, and stakeholders predict that consumers won’t spell “relief” any time soon. They’re reminded that Trump said while campaigning, that he would “negotiate like crazy” and save U.S. taxpayers $300 billion annually. As USA Today’s Slavitt pointed out, that just hasn’t happened, with prices for more than 2,400 drugs increasing by double digits since the new administration took office.
Only time, and drug prices will tell.