Interview with Dr. William Feldman on a new federal price-transparency rule and legal challenges to efforts to increase access to pricing information.
William Feldman is a physician and researcher in the Division of Pharmacoepidemiology and Pharmacoeconomics at Brigham and Women’s Hospital. Stephen Morrissey, the interviewer, is the Executive Managing Editor of the Journal.
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There may be few issues that unite Americans ahead of the 2020 election as do their concerns about the cost of prescription drugs.
A clear majority — 75% — of respondents to a July survey said the cost of prescription medicines would be among the factors likely to influence their votes this year, according to a report from Gallup and the nonprofit West Health. Gallup reported on results from 1,007 interviews conducted with adults between July 1 and July 24.
1. What are the 2020 presidential candidates saying they will do to lower drug prices?
Both President Donald Trump, a Republican, and former Vice President Joe Biden, a Democrat, have highlighted insulin costs in their discussions of the need to lower drug prices.
In a January interview with the New York Times editorial board, Biden noted the widespread discontent among Americans about sticker shock often experienced at pharmacies. He spoke of a need for the federal government to act to make medicines more affordable.
“This is a place where I find, whether you’re Republican or Democrat, you think you’re getting screwed on drug prices. And you are, in terms of everything from insulin to inhalers and a whole range of other things,” Biden said. “So, again, can I guarantee that it gets done? No, but I can tell you what, if anybody can get it done, I can, and I think there’s a consensus for it.”
2. Why doesn’t Medicare, the biggest U.S. purchaser of drugs, directly negotiate on drug prices?
Congress has taken different approaches in designing the terms under which the two largest federal health programs, Medicaid and Medicare, buy drugs.
Medicaid is a program run by states with federal contributions and oversight. It covers people with low incomes and disabilities. Almost 67 million people were enrolled in Medicaid as of May 2020, including about 29 million children. In 1990 Congress decided that drugmakers who want to have their products covered by Medicaid must give rebates to the government. The initial rebate is equal to 23.1% of the average manufacturer price (AMP) for most drugs, or the AMP minus the best price provided to most other private-sector payers, whichever is greater. An additional rebate kicks in when prices rise faster than general inflation.
3. What’s the deal with rebates and discounts?
There’s widespread frustration among lawmakers and policy analysts about the lack of clarity about the role of middlemen in the supply chain for medicines. Known as pharmacy benefit managers (PBMs), these businesses describe the aim of their business as making drugs more affordable for consumers. Insurers like Cigna and UnitedHealth operate some of the nation’s largest PBMs, as does pharmacy giant CVS Health, which also owns insurer Aetna.
“They will tell you their mission is to lower drug costs,” said Rep. Earl L. “Buddy” Carter, a Georgia Republican, a pharmacist and a critic of PBMs, in a speech on the House floor last year. “My question to you would be: How is that working out?”
4. What is the “distinctly American” phenomenon of specialty drugs?
In this Perspective article, Kesselheim and Naci look at how the “specialty” designation morphed from its origin in the 1970s. It then referred to a need for extra steps for preparation and delivery of new injectable and infusion products.
5. How much does it cost to bring a new drug to market anyway?
The median cost for a medicine developed in recent years was $985 million, according to a study published in JAMA in March 2020, “Estimated Research and Development Investment Needed to Bring a New Medicine to Market, 2009-2018.”
“Rising drug prices have attracted public debate in the United States and abroad on fairness of drug pricing and revenues,” write the study’s authors: Olivier J. Wouters of the London School of Economics; Martin McKee of the London School of Hygiene and Tropical Medicine; and Jeroen Luyten of Leuven Institute for Healthcare Policy, KU Leuven, Belgium. “Central to this debate is the scale of research and development investment by companies that is required to bring new medicines to market.”
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Drug Pricing Theme Issue: Is Pharma Earning Too Much?, R&D Costs Required to Bring a New Drug to Market, Probiotic Safety, and more
One in 4 people in the US has difficulty paying the cost of their prescription medications. This stark fact was recently reported in a 2019 Kaiser Family Foundation public opinion poll among a nationally representative random sample of 1205 adults.1 Persons who reported having the greatest difficulty affording their prescription drugs were those who most needed them, including those who took 4 or more prescription drugs, spent $100 or more per month on their drugs, and reported being in fair or poor health.