It used to be that Americans would look the other way when it came to drug prices, concluding that the benefit outweighed the costs. However, with prices continuing their march upward and with more of that price being borne directly by consumers, Americans’ willingness to give pharmaceutical manufacturers “a pass” is fading. This growing reluctance to cut drug manufacturers slack for increasing prescription drug costs is evident in a Kaiser Family Foundation Poll from last month: 72% of Americans now think drug prices are too high and they are blaming the manufacturers for this, and 74% of respondents saying the companies put profit before people.
Not surprisingly, political leaders have looked at this information and concluded that addressing drug pricing could be a welcome health policy respite from endless debate around the Affordable Care Act. Earlier in the summer, Ron Wyden, Ranking Member of the powerful Senate Finance Committee, talked about the need for extending value-based purchasing to pharmaceuticals. More recently, the two lead Democratic presidential nominees, Hillary Clinton and Bernie Sanders each announced plans for reining in drug prices.
While Republicans generally have not entered the current media frenzy on the issue (with the notable exception of Republican front-runner Donald Trump calling the CEO of Turing Pharmaceuticals a “spoiled brat”), one would be foolish to forget Senate Finance Chairman Hatch’s pivotal role in creating the generic drug industry in the United States. His legacy as a legislator is tied to increasing competition in the pharmaceutical space.
A number of different recommendations have been proposed, raising concerns – and a dip in stock prices – in the pharmaceutical marketplace and giving hope to consumer advocates eager to see drug prices reduced. I can’t help, though, but think that it is too soon to mourn or celebrate (depending on your perspective) a reduction in pharmaceutical profits.
The truth is that none of the ideas proposed in recent months is new. This is not to say that the ideas are necessarily bad, as I’ve been a proponent of many of them, but that they haven’t gotten very far in the past. For example:
The outrage that taxpayers are paying higher prices for drugs for dual eligibles (those who are covered by both Medicare and Medicaid) began before Medicare Part D was finalized and has had a steady drumbeat ever since, and yet no movement has been made to remedy this problem. Buses of seniors headed to Canada to purchase their medicine have come and gone without re-importation being legalized.
Additionally, even if some of the ideas gain traction with legislators and regulators, it is questionable to what extent their implementation would remedy high drug prices:
- Pay for delay settlements, which I once helped fight in court, don’t play the role they once did in artificially inflating prices.
- Reducing data exclusivity for biologics isn’t going to lead to meaningfully greater competition if biosimilars are forced to actively market their products because they don’t share the same INN as the originator product.
- Transparency, by itself, no matter what the form, cannot lower prices.
While it is true that more average folks and political leaders are jumping on the “these prices are immoral” bandwagon, it will take an awful lot more to turn this outrage into real change. No matter how high the prices go, pharmaceutical companies will always be able to claim a real role, and sometimes a virtually miraculous one, in improving people’s lives. This is a hard image to tarnish. Couple that with the powerful lobby the industry has in Washington and the close ties between universities and the industry since passage of the Bayh-Dole Act, and we are left with no simple fix. But who needs simple?