Drug price controls are a hot topic across the country. Regardless of which plans ultimately make the cut, people everywhere will experience either the benefit or the fallout.
Following are three guest columns we are sharing, not to take a particular stance but to encourage conversation on the topic; one addresses mental health drugs, the others consider how price controls can be harmful.
SC News readers are invited to share their thoughts on changes to drug pricing reforms and other health care topics. Keep comments to 300 words or less and include your name and hometown. Send to email@example.com.
— Kathy Boyd, editor
Drug reform reversal leaves mental health patients pinching pennies
The White House just axed a proposal that would have made medicines more affordable for patients living with mental illness. Had the change taken effect, millions of Americans would have found it easier to afford the medicines they need.
I’ve made it my life’s mission to help Americans who are battling mental illnesses.
While serving in the House of Representatives, I authored and co-sponsored bills to improve treatment of mental health disorders. And I’ve continued to advocate for these patients since leaving Congress.
Each year, millions of Americans confront mental illness. Roughly one in six Americans relies on some form of psychiatric medication.
Many patients struggle to afford the medications that keep them healthy. In 2017, nearly half of people battling a mental illness went without treatment, according to the U.S. Substance Abuse and Mental Health Services Administration. Almost half of those patients cited cost as the reason.
High out-of-pocket pharmacy bills deserve much of the blame. An analysis published in the Journal of the American Medical Association found that when copays for antidepressants double, patients fill 26 percent fewer prescriptions.
The Trump administration’s proposed rule would have reduced patients’ out-of-pocket costs. Specifically, the rule targeted third-party entities called pharmacy benefit managers.
Insurers hire PBMs to negotiate discounts with pharmaceutical companies. In recent years, PBMs have extracted ever-greater price concessions from drug makers. Total rebates grew from less than $70 billion in 2013 to $160 billion in 2018.
PBMs and insurers often use these discounts to reduce premiums. But they rarely use the savings to reduce patients’ out-of-pocket costs.
The president’s reform would have made it illegal for drug makers to give rebates to PBMs in government programs like Medicare and Medicaid, unless the PBMs and insurers used the rebates to reduce out-of-pocket costs.
This change would have driven down medical expenses for patients with government health insurance. Medicare beneficiaries were expected to save between $14 billion and $25 billion over the next decade.
Unfortunately, now that the Trump administration has withdrawn the rule, these patients will never see those savings.
For too many Americans, high out-of-pocket costs impede access to treatment. Abandoning this helpful reform was the wrong move.
— Patrick J. Kennedy, former U.S. Representative (D-RI), is the founder of the DontDenyMe.org and author of “A Common Struggle: A Personal Journey Through the Past and Future of Mental Illness and Addiction.”
Bipartisan drug prescription best left unfilled
President Donald Trump and House Speaker Nancy Pelosi don’t agree on much. But they both believe Americans pay too much for prescription drugs. To trim drug spending, one of Pelosi’s top aides is working with the White House on a cost-control measure – “binding arbitration.”
This victory for bipartisanship wouldn’t be a win for patients, though. The move would restrict access to state-of-the-art medicines and suppress future innovation.
Under this reform, a research company that invents a new medicine would need to consult with Medicare officials to determine a satisfactory price. If those two parties can’t agree, both sides would make their case to an “independent” arbitrator. It would be up to that arbitrator to determine the price that Medicare should pay.
In theory, this might seem like a neutral way of settling on a price. In practice, however, it amounts to little more than government price-setting.
Consider, first, that the “independent” arbitrators would be appointed by the government. The government could easily appoint an arbitrator with similar ideologies, thus skewing the process from the get-go.
In making their decisions, meanwhile, these arbitrators will likely rely on crude measures such as “cost-effectiveness” and “quality effectiveness.” These kinds of calculations have led governments elsewhere to deny advanced medicines to patients who desperately need them.
Just look at Germany, which adopted an arbitration model for drugs in 2010. In recent years, patients have had access to only 71 percent of new cancer medicines, compared to 96 percent in the United States.
A policy of binding arbitration would also have a disastrous effect on medical innovation. Creating even one new medicine is expensive, costing an estimated $2.6 billion and often taking a decade or more. The vast majority of candidate drugs never reach patients.
Given these risks, attracting investment for new cures requires a stable, predictable market in which successful drugs have a chance to earn back their upfront research costs. A system of de-facto price controls would make such a market impossible.
If an unaccountable government board can dictate a lower price for a new miracle treatment – denying drug companies any hope of recouping their costs – then the incentive to develop such medicines in the first-place would evaporate. Investors would funnel their money into markets less distorted by government price-controls.
That’s a high price to pay for a policy aimed at reducing the government’s drug bill, especially one that isn’t likely to reduce costs very much. After all, the drugs that binding arbitration would target account for a mere 7 percent of overall health spending in this country.
Binding arbitration would erect needless barriers between patients and the cutting-edge treatments that are their only hope of survival. That’s an outcome neither party should welcome.
— Ron Klink is a former Democratic congressman from Pennsylvania and serves as senior policy adviser at Nelson Mullins Riley & Scarborough LLP.
Price controls will harm American patients
The Trump administration is planning one of the biggest changes to Medicare in decades.
The draft rule would effectively bring socialist drug price controls to the United States. The change would threaten patients’ health and discourage companies from funding experimental treatments for deadly diseases.
The rule impacts Medicare Part B, which covers drugs administered via shots and IV drips in hospitals and doctor’s offices. Most cancer treatments, for instance, are covered through Part B.
Part B drugs cost more in America than in countries like Canada and the United Kingdom, which impose strict price controls on prescription drugs. If bureaucratic agencies – such as Canada’s Patented Medicine Prices Review Board – deem a drug too expensive, they refuse to cover it.
Apparently, the Trump administration thinks these countries have the right idea. Officials believe that tying Medicare reimbursements to the average prices paid for drugs in a handful of foreign countries, where price controls are common, would reduce Part B drug spending.
Americans have little to gain and much to lose from statist price controls.
Drug development is risky. It can take decades and cost a staggering $2.9 billion to develop a new medicine. Most experimental drugs never even make it out of the lab. Manufacturers fund future research with the revenue from just a handful of successful products.
The rule would make drug development far less appealing. If the potential return on investment were capped, companies would have little reason to spend billions trying to develop new medicines.
History shows us what happens to drug development when price controls are employed. Europe was a hotbed of drug innovation in the 1970s, producing over half all drugs worldwide. But European nations gradually ramped up price controls in the ensuing decades.
U.S. leaders resisted that temptation, which explains why America now attracts 75 percent of global biopharmaceutical venture capital investments and develops more than half of the world’s medicines, while Europe invents a mere third of drugs.
Price controls may yield some short-term savings, but they would cost patients dearly in the long run.
— Sally C. Pipes is president, CEO and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute and an author. Follow her on Twitter @sallypipes.