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Plan takes aim at skyrocketing costs


Arundi Venkayya
Curator of EngagingPatients.org

If you’ve followed any news about prescription drug prices, you know that 1) many have skyrocketed, 2) some Americans can’t afford their medicines and 3) there are legislative moves to address the issues.

There’s no getting around it. Prescription drugs can be expensive and in many cases are considered lifesaving. Skyrocketing insulin costs have resulted in patients rationing their medication or opting for less expensive options available at big box stores, sometimes resulting in patient deaths.

There is no shortage of blame. Pharmaceutical companies and pharmacy benefit managers have been in the crossfire for years. Although pharmacy benefit managers are supposed to lower drug prices by working as middlemen between pharmaceutical companies and insurance companies, the results often are higher out-of-pocket costs for patients.

To address higher out-of-pocket costs, patients have skipped doses, taken less of a medication, delayed filling a prescription to save money, asked a clinician for a lower cost alternative prescription or tried alternative treatment that didn’t include a prescription drug, according to the CDC.

What’s driving the price increases?

A Health Affairs report published earlier this year says that the price increases are not being driven by innovation or improvements in medications, as some drug companies claim. Instead, the report says, they’re being driven by manufacturers setting higher prices. According to the report, brand name prescription drug costs rose more than 9% a year from 2008 to 2016. Injectable drugs rose more than 15% annually.

Legislative plans

Congressional leaders have been working for months on different plans to reduce U.S. drug prices.

Recently, House Speaker Nancy Pelosi unveiled her plan that would allow Medicare to negotiate lower prices on as many as 250 of the most expensive drugs per year, including insulin, and apply those discounts to private health plans across the country.

A hallmark of the plan is the establishment of an international pricing index designed to bring pharmaceutical costs in line with what other countries pay and that would penalize companies that refuse to negotiate with the government or fail to reach a pricing agreement.

The international price index is favored by Democrats and Republicans and could be a source of agreement in the debate over conflicting legislation.

Proposed penalties are stiff for the pharmaceutical companies. They start at 65% of the gross sales of the drug and increase 10% each quarter the company doesn’t reach an agreement. Companies that raise drug prices faster than inflation also will be penalized. Savings from negotiated prices will be reinvested for research to find new treatments at the National Institutes for Health.

Pharmaceutical industry trade groups are opposed to the plan and cite the move to grant “unprecedented, sweeping authority to set medicine prices in public and private markets while importing price controls from other countries that restrict access to innovative medicines.”

There’s a different plan from the Senate Finance Committee that has some similarities but lacks the penalty rule for the pharmaceutical companies that don’t cooperate.

In a rare bipartisan effort, Congress and President Trump hope to pass legislation by the end of the year.


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