Drug Price Debate Could Stall, Unless Consumers Get Engaged

It’s still unclear whether Congress or the Trump administration will try to tackle the prescription drug price/cost issue this year.  Amid ACA repeal and replace, and possible Medicaid and Medicare reform fights, it seems a stretch.   

In recent weeks, Trump has also changed his tune on the subject.  Soaring prescription prices were a populist rallying cry at his campaign stops pre-election and then pre-inauguration. (“They’re getting away with murder,” he bellowed, referring to drug companies.)

But, fitting a post-inauguration pattern, Trump softened his message after a get-together with pharmaceutical executives on Jan. 31.  He mentioned increasing competition and “bidding wars” as a way to bring prices down—whatever that means. 

As for Congress, the issue stirs hand wringing and rhetoric but no concrete proposals from either side of the aisle so far.

So it’s quite possible that the best that can be hoped for in 2017 is to lay the groundwork for action in 2018-19.   

Apart from the usual stakeholders—drug companies, pharmacy benefit managers, drug store chains, insurers, employers, and consumer advocates—three groups are poised to impact this debate.  One has been around for a while.  The other two are new.  All three could help you track this issue and/or get involved, depending on your perspective. 

1.  The Campaign for Sustainable Rx Pricing  is run by the National Coalition on Health Care’s Action Fund.  The campaign launched several years ago.  NCHC is a broad-based coalition of employers, unions, and physician, hospital and insurer groups, including America’s Health Insurance Plans (AHIP) and the Blue Cross Blue Shield Association; AARP is also a member.  The 27 partners in the campaign reflect that diversity, but not all of NCHC’s members are part of the campaign.   

The campaign bills itself as non-partisan, with a focus on

“fostering a national dialogue on the issue of drug pricing that strikes a balance between innovation and affordability. We believe in market-based reforms that address the underlying causes of high drug prices in the U.S. through increased transparency, competition, and value.”   

John Rother, NCHC’s CEO, is the guiding light behind the campaign.  John was one of AARP’s lead lobbyists on health care and Medicare for many years, and is widely respected as deeply knowledgeable and influential on the issue. 

The Coalition for Affordable Prescription Drugs  also presents itself as broad-based but it has only 12 participating organizations (and presumably funders).  Several are major players.  Among them: CVS Health, UnitedHealth Group, Pitney Bowes, and John Deere. 

The group’s web site makes it clear, however, that it exists primary to promote the pharmacy benefit management (PBM) industry—the middlemen in the prescription drug price and purchasing chain.   

PBMs were celebrated for many years for creating purchasing leverage  for large and mid-size employers with drug companies—to extract lower negotiated prices from the latter for the former.  But PBMs’ reputation has suffered of late as it’s become increasingly apparent that much of the money they saved employers over the last two decades has been through shifting workers to generic drugs and constructing tiered payment plans that shift costs to workers and their families.   

With the benefit of hindsight and experience—in light of where price increases for brand-name drugs (and even some generics) are now—there’s emerging consensus that the savings extracted from drug companies fall far short of what they might have been had the PBM industry been more aggressive, and in less of a co-dependent relationship with drug companies.   

Moreover, the PBM industry still lacks transparency around drug pricing and is slow walking value based purchasing.

The newest kid on the block is Patients for Affordable Drugs.   It launched Feb. 22, with the mission of bringing the consumer voice into the debate over drug prices.  The force behind “P4AD” is David Mitchell, former head of the public policy advocacy firm GMMB in Washington, DC.  Mitchell’s motivation is both professional and personal.  He was diagnosed six years ago with multiple myeloma, a blood system cancer.  He says the drugs that keep him alive cost $26,000 a month. 

Mitchell has kicked off his campaign and web site with $500,000 from the Laura and John Arnold Foundation and $75,000 of his own money.   

“What’s happening in this corner of health care is no longer acceptable,” Mitchell told me over lunch recently.  “Everyone knows it but I’m convinced we won’t get the reforms we need without patients and citizens in general getting involved and taking action.  That’s what we are about.”   

P4AD’s policy priorities:    

  • Break the monopoly pricing power of the drug corporations
  • Require drug companies to disclose how they set prices and how much they really spend on research and innovation
  • Demand complete transparency from pharmacy benefit managers
  • Change federal law so Medicare can use its purchasing power to negotiate lower drug prices
  • Accelerate the approval of generic drugs
  • Reform the overly generous exclusivity protections for brand name drugs, which currently allow drug companies to game the system
  • Create a market-wide system to set prices for prescription drugs based on the value they provide to patients.

Mitchell says that P4AD will operate on the “fundamental notion that we can have innovation and new drugs at reasonable prices. There’s plenty of money in the system to do both,” he says.   

PhRMA (Pharmaceutical Research and Manufacturers of America)  would not agree and is not about to back down on its long-held position that it needs high profit margins to conduct R&D in the very costly hit or miss business of drug innovation.   In January, it launched its latest industry image campaign, dubbed “Go Boldly.” 

According to the publication Advertising Age, the campaign will include TV, print, digital, radio and other advertising and cost “tens of millions of dollars each year and…. last at least three years.”   

I concur with Mitchell that engaged patients and citizens, and their stories, are essential to countering PhRMA’s message, deep pockets, and PR clout. 

Steven Findlay is an independent journalist, policy analyst, researcher and consumer advocate.   

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3 replies »

  1. Steve…good article and great start to a dialogue that is needed. I realize that pharma is only a, what?, 10-15% of the spend issue, but it’s still lots of money. P4AD seems to have listed the right issues. John, can we invite Mitchell to submit something here? Let’s keep looking at this issue. And yeah, PhRMA is formidable.

  2. Thanks for Q. Have not had chance to probe that specific legislation.
    In general, reimportation is a stop-gap solution that essentially imports the policies of other countries instead of enacted those or similar policies here in the US. That said, if we can’t get a political solution here, it’s a ready way to get help for consumers. And at this point there’s a strong consensus that the minimal safety issues are pretty easily overcome. Most raw materials come from other nations already, and most pharmaceutical manufacturing occurs abroad as well.

  3. Steven

    I’m curious. You don’t discuss the Booker-Casey-Sanders reimportation bill here.

    What is your view of their proposal?

    If the administration is going to allow the sale of health insurance across state lines, drug sales across borders seems logical, no?