Two years ago, New Hampshire college student Ally McNamee tried to shoo a bat out of her house. It flew at her face and grazed her open mouth as she screamed. At the emergency room, they treated her with the drug immunoglobulin in case the bat had rabies. (ERs typically are the only places stocking it, according to Vox, which reported McNamee’s story.)
The bill she got for the drug a few weeks later — $3,706 — may have made her mouth drop open wide enough to ingest a spaniel, let alone a bat. But McNamee got a bargain. Immunoglobulin can run almost $10,000. Her case is just one example of why we need a cure for runaway pharmaceutical prices.
The prices of 20 drugs commonly used by seniors on Medicare rose 12 percent, annually, for each of the last five years. And there are anecdotal instances of diabetics dying after having to ration expensive insulin.
No wonder President Trump spent a sunny May Friday announcing his promised plan to put a leash on drug prices. He offered some sound ideas.
But the plan doesn’t go nearly far enough, and you don’t have to take my word for it. Big Pharma stocks rose on news of the president’s proposals. Investors and executives didn’t lose sleep over future hits to their bottom lines. And though Trump criticized pharmacy benefits managers (who negotiate prices with drug companies for insurers and for Medicare Part D’s prescription benefit) for getting “very, very rich,” his announcement made them richer. Their stocks rose, too.
Trump supporters who praise their man as meaning what he says need to know his plan breaks two big campaign promises, fueling Wall Street’s pharma bullishness. His demand that Medicare be allowed to use its market clout to directly negotiate better bargains with drug makers, currently illegal because of a sop from drug companies’ congressional toadies, fell on the cutting room floor, as did call for letting Americans buy cheaper drugs imported from places like Canada.
Drug companies lobbied especially hard against the Medicare piece, arguing that Uncle Sam driving hard bargains would siphon off profits the companies need to invent life-saving drugs. That’s scaremongering.
“Taxpayers are doing most of the research and development for new drugs in this country,” David Mitchell, founder of Patients for Affordable Drugs, told the PBS NewsHour. Citing the National Academy of Sciences, he said that “of the 210 drugs approved by the FDA from 2010 to 2016, [all] were based on science paid for by taxpayers through NIH.”
Mitchell is hardly a disinterested observer; he has an incurable blood cancer requiring pricey pharmaceuticals. Yet he sees “plenty of room to lower prices and maintain a robust R&D pipeline, which I need.”
Trump’s plan includes the promise of using trade negotiations to force other nations, which regulate the prices of imported U.S. drugs, to pay more. Health economist Austin Frakt agrees that other nations benefit from U.S.-financed medical innovations generally. But he adds that that’s hardly the sole reason for our high prices (other nations have more rational health financing and better social services that improve citizens’ health).
Even if we could force foreigners to pay more (a big if), it’s unclear that that would lower prices here.
Trump’s sound ideas, experts say, include requiring drug companies to include the list prices of drugs in their advertising; requiring prescription coverage plans to pass on some of the price breaks they get from drug makers to enrollees in Medicare’s Part D drug program; capping out-of-pocket spending by Medicare patients taking very expensive drugs; and eliminating speedbumps impeding cheaper generic drugs from reaching the market.
But these won’t be enough. Advertising prices almost certainly won’t shame the industry into lowering them. Generics are a real cost-saver, but they only kick in after the patent on a new, brand-name drug has expired.
Unfortunately, this administration isn’t interested either in real reform or promise-keeping.
Republicans are supposed to believe in divesting power down to the states, but there too, Trump likely will go AWOL. His administration is leaning against granting Massachusetts authority to limit the drugs covered under Medicaid, the joint federal-state health program for the poor. The Bay State wants the power to reject drugs to wrest reasonable prices from drug makers.
Drug prices are part of our highest-in-the-world medical prices generally, and there are two proven ways to control that: a single-payer system, with government paying all the bills and setting a hard-and-fast health care budget, or (as I’d favor) the German and Japanese system of gathering all the payers and providers in a region together to hammer out reasonable, standardized prices.
Absent such down-to-the-roots reform, our best bet would have been Trump’s discarded campaign proposals. Empowering government to bargain prices down, and to deny coverage of certain drugs whose makers won’t compromise (unpopular as that would be in the U.S.) works around the world. (Here’s the academic economics of why, if you care.) Unfortunately, this administration isn’t interested either in real reform or promise-keeping.
- A Message To Pharma: Lower Your Insulin Prices
- Trump Administration's 3 Biggest Ideas For Lowering Drug Prices