Op-ed: To cut drug prices, start with the facts
Americans are paying too much for prescription medicines. State lawmakers are fed up with
Their proposals are well-intentioned — but they're doomed to backfire and hurt patients. Why? Well, the bills are based on false assumptions.
Many lawmakers believe that prescription drug prices are skyrocketing. They're not. In fact, after accounting for all the rebates and discounts manufacturers offer, drug prices have barely budged in recent years. Drug spending grew just 1.3 percent in 2016, according to the latest federal data from the
In other words, drug spending is growing slower than hospital and nursing home expenditures. In fact, it's growing even slower than the general inflation rate, which has averaged just under 2 percent.
Legislators also blame drug prices for rapidly rising costs in Medicaid, the entitlement program for low-income Americans that is managed and partly funded by the states. Once again, they're mistaken.
Drug companies provide generous discounts and rebates back to Medicaid to curb its overall prescription drug spending. Medicaid's statistics rarely reflect these discounts. In 2014, the program reported that its gross spending on drugs reached an eye-popping
Federal law guarantees Medicaid the lowest drug prices on the market.
Nevertheless, state lawmakers insist that drug companies are charging too much. So they're calling for a variety of direct and indirect price controls.
One measure floated in
First, the policy wouldn't lower health care costs. Ninety percent of all drugs sold in
Second, importation would be dangerous. America has the safest, most secure drug supply chain in the world, thanks to rigorous
Other countries, even advanced countries like
That's why every
Another proposal, from lawmakers in
This move simply isn't necessary. Multiple drugmakers have introduced competing hepatitis C drugs in recent years. Fierce competition for market share has forced these companies to heavily discount their products. In 2017, Medicaid spending on hepatitis C drugs fell by 28 percent — the biggest drop for any class of medicines.
If states start weakening patent protections, it will have a chilling effect on scientific research. Drug companies won't plow billions in to developing new medicines if the government can break their patents on a whim. Patients would miss out on future treatments and cures as a result of this drop in research. They'd grow sicker. Ironically, that would increase states' long-term health care costs.
This isn't to say that patients aren't paying high prices for drugs. They are. But drugmakers aren't at fault.
Middlemen, like pharmacy benefit managers and insurers, are the ones raising prices on consumers.
Pharmacy benefit managers negotiate drug prices on behalf of health plans. They secure big discounts and rebates on drug prices from manufacturers. But PBMs and insurers routinely fail to pass these savings along to consumers. Instead, they hike consumers' out-of-pocket expenses by forcing them to pay ever-higher co-pays and co-insurance.
If lawmakers want to reduce people's' pharmacy bills, they should demand more transparency from insurers and PBMs. That would drive down prices without jeopardizing consumers' safety or access to medicine.
CREDIT:
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