Doctors’ prescription to stem high medication costs: get tougher on pricing
The pharmaceutical industry has long argued that prescription drug costs are “a relatively small share of total U.S. health care spending” and that the life-saving value of their products should outweigh any concern about their costs. Yet the public sees things differently: a recent poll found that “affordability of prescription drugs continues to be at the top of the public’s priority list for the President and Congress.” A recent study by the Reuters’ news agency of “proprietary” data backs the public’s concern. “Prices for four of the nation's top 10 drugs increased more than 100 percent since 2011, Reuter’s found. Six others went up more than 50 percent. Together, the price increases on drugs for arthritis, high cholesterol, asthma and other common problems added billions in costs for consumers, employers and government health programs.”
The pharmaceutical industry has long argued that prescription drug costs are "a relatively small share of total U.S. health care spending" and that the life-saving value of their products should outweigh any concern about their costs.
Yet the public sees things differently: a recent poll found that "affordability of prescription drugs continues to be at the top of the public's priority list for the President and Congress." A recent study by the Reuters' news agency of "proprietary" data backs the public's concern. "Prices for four of the nation's top 10 drugs increased more than 100 percent since 2011, Reuter's found. Six others went up more than 50 percent. Together, the price increases on drugs for arthritis, high cholesterol, asthma and other common problems added billions in costs for consumers, employers and government health programs."
Physicians, who have long had a mostly symbiotic relationship with the prescription drug industry (physicians need the companies' medications to treat their patients, the industry needs physicians to write prescriptions for their medications), have now joined the chorus of concern. My employer, the American College of Physicians, just released a new position statement, Stemming the Cost of Prescription Drugs, published March 29 in the Annals of Internal Medicine. ACP, as the U.S.A.'s largest medical specialty society and second biggest physician membership society, hopes to alter the debate over prescription drug costs by adding the clout of its 143,000 members.
Our doctors' recommendations fall in five categories:
Require greater price transparency. Pharmaceutical companies should be required to disclose actual material, production, research and development costs to regulators, and rigorous price transparency standards should be instituted for drugs developed from taxpayer-funded basic research.
Increase competition: ACP opposes extending the period in which companies have the sole right to exclusively market their drugs. Medications that gain FDA approval are granted varying marketing exclusivity periods, often beyond the terms of patents—5 years for chemical products, 7 years for orphan drugs, and 12 years for biologics—if certain legal requirements are met. During this time, other drugs are prevented from obtaining FDA approval and entering the market. Manufacturers also engage in a practice called "evergreening" in which the company producing a brand-name drug makes minor or modest changes that provide no therapeutic advantage to extend the life of the patent. They may also enter into "pay for delay" agreements with manufacturers of generic drugs that effectively keep generic versions of their products off the market. ACP called for robust oversight and enforcement of restrictions on evergreening and pay-for-delay agreements as a way to increase marketability and availability of competitor products.
Incorporate value, assessments of the impact of a medication on the quality of life, and comparisons of the effectiveness of different drugs. ACP believes that "establishing an evidence base of clinical effectiveness data is the crux of transitioning to a health care system that pays for and rewards value" and current restrictions on the consideration of such evidence in pricing, coverage and payment should be lifted.
Allow Medicare to negotiate a better price. Currently, the Medicare program is prohibited by law from using its group purchasing clout to negotiate a better price from drug companies for prescriptions covered under the Part D program. Instead, it relies on private companies, called pharmacy benefit manufacturers, to negotiate a lower price. Recent estimates cited in ACP's paper show that allowing Medicare Part D to negotiate prices could save $15 to $16 billion per year. ACP also recommended that consideration be given to developing a process to reimport certain drugs manufactured in the United States, provided that the safety of the source of the reimported drugs can be reasonably assured by regulators.
Payers that use tiered or restrictive formularies must ensure that patient cost-sharing for specialty drugs are not set at a level that imposes a substantial economic barrier to enrollees obtaining needed medications, especially for enrollees with lower incomes. While most of ACP's recommendations were directed at drug manufacturers, legislators and regulators, it also recognizes that the insurance industry contributes to the unaffordability crisis when it imposes excessive and possibly discriminatory cost-sharing requirements on specialty drugs, like those used to treat HIV and AIDS.
The initial reaction from the pharmaceutical industry, predictably, was to oppose ACP's recommendations (except for the one directed at insurers), with one trade group saying "Many of the proposals released by the American College of Physicians would significantly hinder the ability of emerging biotechnology companies to develop the new cures and therapies that patients need to live longer, more productive lives."
On the contrary, it's excessive and rising prices for many prescriptions that ACP's analysis shows is hindering the ability of patients to obtain needed cures and therapies, not just for new ones but also drugs that have long been on the market. The public evidently agrees with the doctors' diagnosis that excessive and unjustified price increases are making many drugs unaffordable. Unless the pharmaceutical industry itself is willing to embrace change, it will fall to legislators and regulators to take the necessary actions to drive down costs.
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