Lower Drug Prices On The Horizon: Reality Or Mirage?

Lower drug prices are on the horizon.  Is that a reality or a mirage? The fact is that affordable drug prices are currently an unmet public health imperative according to a new report by the National Academies Of Sciences.

Indeed, a study recently published in Health Affairs estimated that branded drug manufacturers more than triple the gross profit that generic makers net. Yet, it is hard to pinpoint exact figures due to the supply chain’s secretiveness.

The Academy has outlined several paths to more affordable drugs through various policy reforms. They range from consolidating the government’s purchasing power to negotiate lower drug prices with manufacturers, closing loopholes in the regulatory framework that block competition, and requiring drug price transparency.

lower drug prices

Lower Drug Prices: Current Status

The current status quo has drained the entire healthcare industry as consumers, providers and insurers have to navigate around high-cost drugs or eat the cost. Consequently, there is no price competition due to patent protection manipulation, growing market shares that distort negotiations between suppliers and purchasers, and a complex pharmaceutical supply chain.

Right now, high and increasing costs of prescription drugs together with rising prices in overall medical expenditures, now equals 18% of the nation’s gross domestic product. This is unsustainable, says the Academy.

In addition, pharmaceutical companies and industry groups fight Medicare to negotiate drug prices, claiming that a free-market system without governmental intervention works better. They are also against drug importation citing potential safety concerns without the FDA’s oversight. This has knee capped federal policy reform.

Lower Drug Prices:  Solutions

1. Insurers and drug companies should disclose the average net price paid for drugs, and the U.S. Department of Health and Human Services should analyze and report the data on a quarterly basis to find anticompetitive practices.

2. Congress should disallow direct-to-consumer advertising of prescription drugs as a tax-deductible expense. Moreover, clinicians, medical practices, and hospitals must tighten restrictions on pharmaceutical companies’ direct visits to clinicians, offering them  inducements, which lead to inflated drug costs.

3. Congress should establish limits on total annual out-of-pocket costs paid by enrollees in Medicare Part D plans. Just remove the cost-sharing requirement for patients who reach the catastrophic coverage limit, and prices will come down.

4. Also modify the Medicare Part D plan and health insurance exchanges to reduce out-of-pocket expense for drugs that, if taken as scheduled, will reduce the total cost of care.

5. Patient deductibles and co-payments through Medicare Part D should be calculated as a fraction of net prices, not list prices. List prices have no bearing on actual cost, says The Academy report.

Lower Drug Prices: Eliminating Loopholes

The FDA needs to repair the porous regulatory framework that allows branded drug manufacturers to block generic competitors. Brand-name developers don’t give generic firms access to samples needed to make copies of their drug. They also use patent infringement laws to quell perceived threats.

For example, Mylan and Valeant Pharmaceuticals hiked the prices of decades-old off-patent drugs that had no competition. For example, between 2010 and 2015 there were 315 examples of generic drugs with sudden increases of at least 100%.

Currently, the FDA tries to prevent this by expediting generic approvals for branded drugs that have less than four competitors.

Conclusion

Currently, The Affordable Care Act  is being reviewed by Congress. Making health care affordable for Americans, no doubt would also include revamping regulations governing prescription drug prices.

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