Tags: drug | prices | lowering | transparency | competition

Mark Hahn: Transparency, Competition Key to Lower Drug Prices

dollar sign written with pills spilled from a medicine bottle.
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By    |   Tuesday, 12 March 2019 01:30 PM

Since announcing his decision to return to the helm of the Senate Finance Committee, Senator Chuck Grassley has been working tirelessly to fulfill a policy priority to improve “the affordability, quality and accessibility of health care.”

Nowhere has this been more pronounced than his efforts to rein in out of control drug prices and increase transparency and competition in an otherwise murky marketplace. As Chairman, he has already organized a series of hearings on “Drug Pricing in America” bringing forward patients, policy experts, and industry executives to examine ways to increase affordability of and patient access to life-saving prescription drugs.

These hearings have demonstrated the commitment the Republican Senate majority has to make healthcare more affordable for the American public and are a strong complement to the efforts that the Trump administration has been undertaking to bring reform to America’s broken drug pricing system.

Significant progress has already been made during the first two years of Donald Trump’s presidency. Two laws signed this past October, the Patient Right to Know Drug Prices Act and the Know the Lowest Price Act effectively ended the “gag order” that prevented some customers from inquiring about drug prices at the pharmacy counter, peeling back a layer of obfuscation surrounding the true cost of prescription drugs. The Trump Administration has also made promoting generic drug competition a significant priority, approving over 1,000 generic drug applications in 2017 alone and saving Americans an estimated $9 billion.

These are positive policy developments, and there are a number of other reforms that Congress and the Executive Branch are considering that would bring more market-based competition to the pharmaceutical industry and lower drug prices. 

Consumers are often unaware of the list price of the drugs they are purchasing. This has a significant impact on everyone from senior citizens on Medicare part D who are paying co-insurance based on a percentage of the prescription list price to individuals on high deductible plans who must pay thousands out of pocket before their insurance kicks in. Requiring pharmaceutical companies to disclose drug prices in their ads, a move that both President Trump and Senator Grassley support, would be a strong step to provide more much needed transparency.

Too often pharmaceutical companies have engaged in tactics that circumvent the laws and regulations meant to encourage generic drug competition. “Pay for delay” deals (payoffs to generic drug manufacturers to not produce a competing drug) and limiting generic access to product samples for research purposes have allowed brand name drug manufacturers to delay the entry of other companies into the market. Bipartisan efforts are underway to end these anti-competitive tactics and provide more options for consumers.

One area of burgeoning attention is the role that Pharmacy Benefit Managers or PBMs play in the process. The cost of PBM services are sometimes covered by keeping rebates paid from drug manufacturers and not passing them along to be applied to co-pays, premiums, reimbursement to pharmacies and doctors. While it important to institute reforms that ensure that patients benefit in the form of lower prices and premiums, it is important to note that even pharmaceutical companies use PBMs to control drug prices for their employees.

There has been some confusion as to PBMs effect on drug prices at the counter; pharmaceutical companies are trying to convince Congress that they are responsible for driving much of the recent cost increases. While drug pricing is a complex formula with many moving parts, that fact of the matter is that pharmaceutical manufacturers are responsible for large price increases that far outpace inflation.

The reality is this business model in many ways provides the framework for the conservative free market model of negotiating drug prices the Trump administration seeks to encourage. The Trump Administration has proposed restricting rebates that PBMs negotiate with insurance companies. While this could make list prices go down for some drugs, patients would end up paying more for their drugs out of pocket. The Administration should follow Senator Grassley’s lead in holding drug companies accountable for high prices.

Lowering the cost of healthcare won’t be easy, but it is possible. As Congress and the Administration work through drug pricing reform, it is important that they keep a focus on these true drivers of cost while working to make healthcare more affordable for all Americans.

Mark Hahn is a Sioux City, IA based radio host.

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Lowering the cost of healthcare won’t be easy, but it is possible. As Congress and the Administration work through drug pricing reform, it is important that they keep a focus on these true drivers of cost while working to make healthcare more affordable for all Americans.
drug, prices, lowering, transparency, competition
Tuesday, 12 March 2019 01:30 PM
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