President Donald Trump campaigned on lowering sky-high drug prices for American consumers, but he may be unable to fulfill that campaign pledge due to some Republicans in the GOP-controlled Senate.
Both Democrats and Republicans have signed on to several drug price control bills stalled in Congress: House Speaker Nancy Pelosi’s Lower Drug Costs Now Act of 2019 (H.R. 3) and Sen. Chuck Grassley’s (R-Iowa) Prescription Drug Pricing Reduction Act of 2019 (PDRPA).
Both bills call for limits on drug prices and prevent the pharmaceutical industry from raising prices faster than the rate of inflation.
Last week, Trump announced support for both bills on Twitter and called for Congress to take action on lowering drug prices: “Let’s get it done in a bipartisan way!”
But some Republicans, like Senate Majority Leader Mitch McConnell (R-Ky.), decry drug price control proposals like Pelosi’s bill as “socialist” and dead on arrival in the Senate.
Multiple studies show that drug prices in the U.S. are considerably higher — 30 to 190 percent higher in 2015 — than in European countries, which impose price controls on prescription drugs.
According to a Johns Hopkins University report released in January, the U.S. spends 145 percent more on health care costs than the Organization for Economic Cooperation and Development (OECD) median. When health care spending is ranked by country, the U.S. comes in first place and spends 25 percent more than the second-place country, Switzerland.
The main conclusion of the report was, “Americans on average continue to spend much more on health care — while getting less care — than people in other countries.”
Health care costs are the No. 1 reason Americans file for bankruptcy, according to research from the American Journal of Public Health.
Trump, Democrats, and many Republicans see price controls as one way to combat these rising costs.
Before winning his seat in the Senate, Josh Hawley (R-Mo.) wrote an op-ed calling for drug price controls.
“Fix the FDA bureaucracy and accelerate approval of generics, and new drugs too,” he said. “We also need to take a hard look at the bad trade deals that let foreign governments pay less for prescription drugs and shift research and development costs to Americans.”
Last year, Trump endorsed drug price controls, and Reuters reported in July that Trump plans to cut drug prices for Medicare. But some conservatives, and the pharmaceutical industry, argue that cutting or limiting drug prices will stifle drug innovation, leading to fewer life-saving drugs on the market.
Last week, the National Association of Manufacturers released a statement condemning drug price control efforts in the U.S.
“We are in a period of tremendous breakthroughs and medical discovery, led by pharmaceutical manufacturers in partnership with the National Institutes of Health, universities and other private groups,” NAM said. “Pharmaceutical manufacturers spend more on research and development than any other industry, creating new treatments and cures that have the potential to save and improve millions of lives. In addition to funding R&D up front, pharmaceutical manufacturers also put a sizeable share of their revenue back into R&D so that today’s treatments can help fund tomorrow’s cures. Imposing arbitrary price controls will threaten those investments and undermine a system that is working to save millions of vulnerable people.”
But despite no new innovations to insulin, the price of the drug tripled from 2002 to 2013, and then nearly doubled from 2012 to 2016. According to their own financial data, Big Pharma profit margins average around 20 percent — sky-high compared to every other industry except banking — and earn double in profits what they spend on R&D.
Drug companies also spend considerably more on marketing than they do on R&D. Well-known American companies like Johnson & Johnson and Pfizer spent almost twice as much on marketing than R&D in 2014 alone.
NAM acknowledged that health care and prescription drug costs “have been rising too quickly for far too long for American families,” but did not specify an alternative solution to combat those rising costs.
The drug industry’s lobbying group, Pharmaceutical Research and Manufacturers of America (PHRMA), calls for a different type of solution and took aim at insurance companies’ opaque pricing practices in their own statement.
“We do not need to blow up the current system to make medicines more affordable,” PHRMA said. “Instead, policymakers should pursue practical policy solutions such as sharing negotiated savings with patients at the pharmacy counter, lowering coinsurance in Medicare Part D, increasing transparency on patients’ costs, promoting value-based contracts, among other improvements to the system. These solutions are better alternatives to the far-reaching proposals in Speaker Pelosi’s plan.”
Two Johns Hopkins University professors of health policy, Marty Makary and Ge Bhai, also argued earlier this year that forcing insurance companies to disclose their pricing agreements with hospitals and drug companies could “save health care.”
“As these money games dominate health care, patients are getting hammered with egregious medical bills and left holding the bag,” Makary said.
In an April op-ed for The Wall Street Journal, Bhai said some kind of price transparency legislation would have the “fewest unintended consequences” for health care in the U.S.
“Revealing the full price of medications in direct-to-consumer ads would empower consumers, making it easier for them to comparison-shop,” she wrote. “Patients could consider the cost of medications in advance and discuss with their physician the financial implications of various therapies. That would spur price competition and promote moderation in manufacturers’ pricing decisions.”
But 2020 Democratic presidential candidates like Sen. Bernie Sanders (I-Vt.) say the system is too broken to continue. Earlier this year Sanders introduced the Prescription Drug Relief Act to the Senate, which would allow Americans to import lower-cost drugs from other countries while also cutting American drug prices in half. The bill is also part of his presidential campaign platform.
Given that health care is still the No. 1 issue for American voters, how Trump handles the drug price control legislation fight could affect his chances at reelection going into 2020.
“The giant pharmaceutical and health insurance lobbies have spent billions of dollars over the past decades to ensure that their profits come before the health of the American people,” Sanders said.
