U.S. Should Control Drug Prices the Way Europe Does: NYT
A 7/6 New York Times editorial board opinion piece urges the Trump Administration to curb drug price increases the way Europe does – “by tying a drug’s price to its actual value.” It says HHS should evaluate and rank medications based on their cost effectiveness. The board notes that earlier “public shaming” by the Trump Administration offered a temporary reprieve, but companies again have their sights on numerous price increases: drug prices rose four times faster than inflation in the past six months alone. And a new rule requiring drug makers to include product pricing in television ads is unlikely to accomplish much — “it, too, is predicated on the idea that shame will change behavior, even though the industry has proved remarkably shame-resistant,” it says.
The opinion piece recommends several moves that the administration could do now to improve the pricing dilemma. For one, the board says the government should, like other developed countries, play a larger role in deciding which new drugs will be covered under medical programs and how much they are willing to pay for them based on the benefits they provide over existing therapies. “For example,” it says, “Britain will cover a new medication only if the benefits it provides are high relative to its price. Germany will pay more money for a new drug, compared with an older one, only if the new drug is better in some way. By tying a drug’s price to its actual value, these countries ensure that their consumers have access to effective medications — while also protecting them from getting ripped off.”
The board also recommends that the government negotiate more and better with drug makers. “In other countries, the government negotiates directly with the pharmaceutical industry (using comparative effectiveness data, among other things),” the opinion piece says. “In the United States, the system is scattershot. Private insurers and the Department of Veterans Affairs all negotiate with drug makers separately, which diminishes their bargaining power. In the meantime, Medicare is legally required to cover nearly all drugs approved by the Food and Drug Administration at whatever price the drug maker sets — direct, collective negotiation is prohibited. Medicaid is similarly required to cover all drugs, no matter how well or poorly they work.”
The opinion piece says that the Centers for Medicare and Medicaid Services have the power to grant waivers to individual states that want to exclude certain drugs from their Medicaid plans or that want to negotiate additional discounts for certain Medicaid prescriptions. The agency has been reluctant to allow such waivers, and the board says that if it were to permit such waivers in the future, it could lead the way to a better system.
Additionally, the board urges more involvement by the Federal Trade Commission (FTC) to combat “dubious tactics to prevent generic medications from coming to market... The administration could help combat such practices by directing the Federal Trade Commission to crack down on drug companies that employ them. The threat of investigations and steep fines — which the FTC can levy — may finally succeed where shame has failed.”
Industry is not so welcoming of the recommendations. “These proposals would do irreparable harm to the nation’s health innovation system, leading to restricted access for patients to innovative treatments and significantly hindering the ability of emerging biotechnology companies to develop the new cures and therapies that patients need to fight their diseases,” Biotechnology Industry Organization spokesman Daniel Seaton told FDA Webview 7/8. “Intrusive government regulation of a system that relies on entrepreneurial vision and private capital is a recipe for failure. A patient-centered approach to rising healthcare costs would include reforms to limit the out-of-pocket cost for drugs that are imposed upon patients by insurance companies.”
Meanwhile, the Washington Post reports that HHS secretary Alex Azar has been “pushing FDA to go even bigger and broader on importation” as part of the Trump Administration’s efforts to demonstrate its work to keep a 2016 campaign promise to lower drug prices as the 2020 re-election bid takes shape. “A senior administration official said there was frustration at a lack of executive branch tools to lower drug prices and that some of Trump’s ideas were ambitious but unworkable,” the Post reported last week. “Disagreements over how to proceed have created a policy free-for-all as different advisers — and the president himself — pursue what appear to be ad hoc and sometimes dueling approaches. Trump entertains proposals usually pushed by progressive Democrats one moment and free-market GOP ideas the next.”
While proposals for importing lower-cost drugs from countries like Canada have the ear of the president, other approaches have been promoted on Capitol Hill, “where Azar is advising the Senate on a modest bipartisan package of legislation that aims to lower health-care costs by addressing surprise medical bills, promoting greater transparency and making it easier for generic drugs to get to market,” the Post notes. “But officials from the White House — eager to strike a bold deal that would give Trump a high-profile signing ceremony — are in talks with House Speaker Nancy Pelosi’s office about allowing Medicare to negotiate the prices of select drugs, according to Hill aides and lobbyists. Republicans and Democrats alike say they are skeptical such a deal can be struck with the presidential campaigns already underway.”