Editor’s note: In order to give our readers the best information from which to make health care decisions, the Dayton Daily News is digging into what drives prescription drug prices with a multi-part series. The full investigation will run in Sunday and Monday’s papers and look for more from this investigation online this week.
Reforming the drug industry has become a hot political topic with both sides of the aisle calling for changes.
“The American people should not be forced to choose between filling a prescription or making their monthly mortgage payment,” Sen. John McCain said in a statement last year announcing the bipartisan FAIR Drug Pricing Act, which would require drug makers to publicly disclose information on planned price increases. “Transparency leads to accountability, and it is past time that mantra applied to the skyrocketing cost of prescription medication.”
Many Americans are demanding changes. In a September Kaiser Family Foundation poll, 82 percent of the respondents favored giving Medicare — the federal government’s insurance program for seniors — new authority to negotiate prices with drug companies. Seventy-eight percent supported limiting the amount companies can charge for high-cost drugs. And 86 percent said they want more transparency on how drug companies set prices.
VIDEO: How do drug prices get set?
In his first press conference after being elected, President Donald Trump called for a new “bidding procedure” for buying drugs, saying the pharmaceutical industry and its power lobbyists are “getting away with murder.”
“We’re the largest buyer of drugs in the world and yet we don’t bid properly,” Trump said.
Just what will change, and how quickly, is not clear, however. Medicare as a single entity currently cannot negotiate with pharmaceutical companies, though Sen. Bernie Sanders, I-Vt., has vowed to introduce legislation to open that door.
Each Medicare plan sponsor — Dayton-based CareSource for example — instead negotiates prices through their own pharmacy benefit managers.
Proponents say giving the federal government the ability to negotiate on behalf of millions of Medicare beneficiaries would provide better leverage than the pharmacy benefit managers are currently able to get, particularly for high-priced specialty drugs for which there is no competition.
But critics — pharmacy benefit managers among them — argue that private plans already negotiate the best deals available. Express Scripts represents 85 million members on 3,000 different health plans, according to spokesman Brian Henry. That’s double the number of people on Medicare prescription plans.
There’s also concern that pharmaceutical companies would reduce their investment in research and development if government negotiation held down the prices they could charge.
Other suggested reforms have to do with the FDA approval process.
“How a drug moves its way through, that process is a mystery to everyone and adds time and expense to the process that I think isn’t benefiting anyone,” said Kevin Schlotman , vice president at Cincinnati-based Benovation, a health plan administration firm.
READ MORE: 3 reasons prescription drugs cost so much
Many argue that more transparency is needed.
The FAIR Drug Pricing Act — sponsored last year by McCain, Sen. Tammy Baldwin, D-Wisc., and Rep. Jan Schakowsky, D-Ill. — would force companies to file a report justifying why a price increase of more than 10 percent on certain drugs is necessary. The report would also document the amount of profits from sale of a drug.
The bill did not move past the committee stage.
Others say the public needs to put high drug prices in context.
If someone has a disease that currently sends them the hospital four to six times per year, their cost to manage that condition is likely more than $100,000 annually, said Marc Sweeney, founding dean of the School of Pharmacy at Cedarville University.
“So you come out with a drug that prevents that hospitalization and it costs $40,000. Well when you look at it just drug to drug you say that’s very expensive,” he said. “But if $40,000 saves your overall medical plan $100,000, well then that’s a good deal.”