It’s no secret that drug prices are high for Americans. After studying wholesale prices for thousands of drugs, researchers at the University of Pittsburgh found that prices from drugs of all types and from all classes (brand-name, specialty, generics/orals or injectable) have been rising faster than inflation from 2008 to 2016.
Outside the United States, despite the content of the drugs being the exact same, countries don’t endure the same exorbitant costs. According to Vox, the difference is how regulatory system is (or in this case, is not) set up around the pharmaceutical industry. The United States doesn’t regulate or negotiate the prices of new prescription drugs when they come onto market; the government allows every drug that’s proven safe to come onto the market and then permits the drug company to set their own price for a given product. Other countries, however, have government agencies that negotiate an appropriate price with drug companies, taking into consideration the drugs’ risks and benefits.
Americans are struggling with costs and asking the government for more help. As reported by NPR, according to survey results by the Kaiser Family Foundation (KFF), about a quarter of Americans said they’ve had trouble paying for their prescription drugs. In addition, 63 percent say there’s not as much regulation as there should be to help limit the price of prescription drugs, and a majority welcome government action to help cut the cost of medications.
It seems Congress has heeded America’s call for intervention. A slew of solutions, many with bipartisan support, have appeared to tackle drug prices, and some proposals are the same ones KFF survey respondents say they would support. According to the New York Times, the proposals fall under the following umbrellas:
- Use the power of the federal government to negotiate with drug companies
- This proposal borrows from the regulatory system of our counterparts abroad. Currently in the United States, private insurers negotiate with drug companies for the price of drugs in Medicare. Medicare is barred from direct negotiations. Proposals by House Speakers Nancy Pelosi and Representatives Lloyd Doggett (D-TX) and Senator Sherrod Brown (D-OH) would change that. Pelosi is floating a compromise of the Department of Health and Human Services negotiating the price of about 250 expensive drugs a year with drug companies. Doggett and Brown proposed a direct negotiation bill in February. 86 percent of KFF respondents say they support this kind of proposal.
- Lower out-of-pocket costs for Medicare beneficiaries
- Medicare consumers often pay out-of-pocket costs for drugs on a list price, despite private pharmacy benefit managers having negotiated discounts, or rebates. This Trump administration proposal supported by the pharmaceutical industry would eliminate the legal protections for rebates, and require discounts to be passed along to consumers, giving manufacturers an incentive to lower the list prices and reducing the costs that many older citizens face at the pharmacy.
- Cap out-of-pocket spending under Medicare
- The drug coverage program, known as Part D, has no limit on out-of-pocket spending, leading some to pay thousands of dollars for expensive drugs. A proposal by House Democrats and Republicans would limit annual out-of-pocket spending to $5,100.
- Restrict the games drug companies play to avoid
- Several proposals in Congress, some with bipartisan support and some that have already passed through a chamber, would target the tactics companies use to maintain monopolies. One would force brand-name drug makers to give samples of their drugs to would-be competitors allowing cheaper copies can be created; another would limit the “pay-for-delay” deals brokered by brand-name drug companies and generic manufacturers to postpone competition.
- Require drug companies to list their prices in
- Expected to be implemented later this summer, pharmaceutical manufacturers will be required to post in television advertisements the list prices of drugs that cost more than $35 a month in order to shame drug makers into lowering prices. 88% of KFF survey respondents support this proposal.
As the legislative landscape moves towards making drug prices fairer for Americans, Softheon is also playing a role. To make the experience of paying for the drug at the pharmacy counter more predictable, we’re creating a drug pricing tool for consumers to use.
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