Will Pharma Prices Take a Hit from Congress?
The newly-seated Congress is ready to take on drug manufacturers’ inflated pricing and anti-competitive practices. This will be a bipartisan effort, with lawmakers like Senator Chuck Grassley (R-IA) on board, even though this hasn’t been a signature issue for him up until now. Ideas that have been floated include going after anti-competitive practices by drugmakers, approving drug imports from other countries and allowing Medicare to negotiate drug prices directly with manufacturers.
For many people, especially seniors, the rising cost of prescription drugs has eaten into their monthly budgets. Drug companies have developed various tools of the trade to keep people on more expensive name-brand drugs for as long as possible. This includes making payments to generic manufacturers in exchange for a delay in producing generic versions of patented drugs. Some companies also remarket existing drugs in different formulations, obtaining new patents.
Research and Development
Drug manufacturers have traditionally defended high prices by citing the high cost of research and development for new drugs. Although they do spend more on R&D than many other manufacturers, it doesn’t stop them from making record profits. The rationale for allowing drug companies a monopoly on certain classes of drugs needs to be balanced better with the initial development costs. Once a drug has been formulated, manufacturing it can cost just pennies per pill.
The Role of Government
One avenue the government could use to help stem the rising tide of drug costs is to provide funding for public drug research. This would help consumers make informed decisions about the effectiveness of drugs rather than automatically buying the newest prescription on the market. Hard data on a drug’s clinical effectiveness and cost would also be easier to come by if the government took on a role in the production of essential medications.
Allowing consumers to import cheaper drugs from Canada was a proposal embraced by the late Senator John McCain (R-AZ). Congress is currently working on solutions to ensure the safety of imported drugs and prevent counterfeiting. These have long been issues touted by drug company lobbyists in arguing against relaxed importation laws. Oversight by the Federal Drug Administration (FDA) is one option suggested to counter those objections. Over time, other countries could be added to the list of approved drug exporters.
Democrats like Senator Bernie Sanders (D-VT) and Rep. Elijah Cummings (D-MD) have sponsored several bills designed to lower prices based on previously discussed ideas. Grassley and Senator Amy Klobuchar (D-MN) are also co-sponsoring two bills to allow generic drug manufacturers to get cheaper versions of name-brand drugs on the market as quickly as possible. Other ideas being considered include:
. These would limit the out-of-pocket payments for prescription drugs required by insurance providers. Medicare, Obamacare and all group insurance plans would be included in this proposal.
Medicare drug-price negotiations
. Lawmakers have suggested allowing the government to negotiate on drug pricing for Medicare, which could keep prescription drug prices at reasonable levels. And if Medicare-for-All should be implemented, these negotiations would be a prime means of controlling drug costs for the program.
Charging Medicaid rates for Medicare drugs
. This measure could save low-income seniors an estimated $154 billion over a decade.
Price controls on excessively-priced drugs
. Rates would be determined by comparing the costs of the same drug in other developed countries. Generic versions would be allowed with “reasonable royalties” paid to the company that developed the drug.
Drug Affordability is Vital
Many people, especially seniors, can’t afford the rising costs of prescription drugs. To cope with the expense, some have cut their pills in half or skipped doses. Until now, the balance between medical innovation and the needs of patients has favored the profits reaped by drug manufacturers. The new Congress and the Trump administration share a common goal in finding a solution that will benefit consumers as well.