Prescription drug costs becoming key issue for president, 2020 candidates

The cost of prescription drugs was a key issue raised during President Donald Trump’s recent State of the Union address and likely 2020 presidential candidates are making it a central issue for the race for the White House.

When Sen. Sherrod Brown, D-Ohio, introduced two bills aimed at lowering prescription drug prices earlier this month, he became the latest to try to solve what may become the pocketbook issue of the 2020 presidential race.

Brown, who is considering running for president, has co-sponsored with White House candidate Sen. Amy Klobuchar, D-Minn., a proposal allowing the federal government to negotiate Medicare drug costs with drug companies. With Sen. Kirsten Gillibrand, D-N.Y., another White House contender, he introduced a second that would require drug companies to report price increases to the government and justify those increases.

Separately, Sen. Elizabeth Warren, D-Mass., has a plan to manufacture generic drugs when the market fails.

President Trump said in the State of the Union he wants regulations aimed at lowering prices for Medicare recipients.

Forget the old political promise of a chicken in every pot. These days, the promise is a solution for the sometimes shockingly high cost of prescription drugs.

Fixing a complex problem

The focus on the issue speaks to both the severity and complexity of the problem: According to the Kaiser Family Foundation’s Health Tracking Poll, 44 percent of those polled said they are worried about not being able to afford the prescription drugs they need, while 24 percent said they or a family member has not filled a prescription, cut pills in half or skipped doses because of cost.

“This is definitely not a perceived problem or a made up problem,” said Juliette Cubanski, associate director of the program on Medicare Policy at the Kaiser Family Foundation. “For many Americans it’s a very acute problem.”

And one caused by a laundry list of complicated reasons. Patent law protects new drugs, meaning competitors can’t release generics quickly. Some common drugs have few manufacturers, which drives the price up. And drug companies argue that they need to charge more in order to innovate and cure the diseases once thought to be death sentences.

Regardless of the reason, the problem has potentially devastating consequences.

Impact on Ohio patients

When Antavia Worsham of Cincinnati was 16, she was diagnosed with Type 1 diabetes. She was able to pay for her insulin for years because she was on a children’s health program that discounted the price of the drug.

Then she turned 21. Financial assistance ran out, and Antavia couldn’t afford the insulin she needed to save her life. She began rationing her insulin. Within a year, she was dead.

“I miss her,” said her mother Antroinette Worsham, who now worries about her other daughter, also a diabetic.

Maura Calesyn, managing director of health policy at the left–leaning Center for American Progress said any meaningful fix to the prescription drug pricing problem must address two problems: high launch prices for new drugs and price increases for existing drugs. “If you tackle one problem without the other it’s not really going to help,” she said.

But James Capretta, a resident fellow at the conservative American Enterprise Institute, said there’s a downside to the government interfering.

Giving innovators exclusivity rights and allowing them to reap the benefits of creating new products, he argues, encourages them to innovate, sometimes coming up with life-saving cures. He said the best way to lower prices is to stop abuses of the patent system that artificially drive up the price of drugs and supply competition “whenever and wherever possible.”

It’s hard to argue against innovation. Prior to 2013, for example, there was no cure for Hepatitis C. In 2013, however, a drug named Sovaldi was introduced to the market and everything changed. Similarly, recent decades have seen breakthrough cancer treatments. And some are willing to pay a lot for such breakthroughs. “If a cure for Alzheimer’s came out, people might be willing to pay a lot more,” Cubanski said.

Still, she said, some drug companies have exploited patent law by tweaking small parts of their formula and applying for further patent protection – effectively barring competitors from introducing competing drugs.

Some areas of agreement

One solution that both Trump and some Democrats have embraced is the prospect of capping out of-pocket costs for Medicare prescription drugs.

While most employee-based health care systems and Obamacare exchange plans have some sort of cap on out-of-pocket costs for prescription drugs, no such cap exists for Medicare. The median income for Medicare recipients in 2016 was about $26,000, meaning many Medicare recipients are balancing the cost of drugs with rent, utilities and food.

Trump has also sought to change regulations for Medicare’s pharmacy benefit managers – companies that manage prescription drug benefits for health insurance companies. PBMs help health insurers and employers decide which drugs to cover and negotiate with pharmaceutical companies to get rebates basically in exchange for having specific drugs be put on a list of drugs covered by Medicare.

Trump has proposed that any discount go to consumers who are buying the rebated drug rather than the PBMs. The rub is this: That discount is often used to lower premiums to all consumers, so it’s unclear if the rule will unintentionally go to some consumers while driving up the cost of premiums for a much larger group.

“There’s a lot of uncertainty about this proposal,” Cubanski said. “There’s also a lot of concern about the fact that it could very well increase Medicare spending overall.”

Some argue that the government should intervene by negotiating drug prices for Medicare, rather than leaving it to PBMs.

“The idea is Medicare has 60 million beneficiaries and this should be a way for the federal government to leverage that collective bargaining power to drive down prices,” Cubanski said, saying it’s possible such negotiations would have a “spillover” effect that would drive prices down for private insurance as well.

Rachel Sachs, an associate law professor at Washington University in St. Louis, said while there have been a spate of proposals in recent years to allow the government to negotiate with drug companies for Medicare Part D, they haven’t included provisions that would force the drug companies to play ball.

Under the bill Brown introduced with Klobuchar, if negotiations fail and pharmaceutical companies don’t sell drugs at a reasonable price, the government can issue a license for the production of the drug in question — even if that drug is still under patent.

“It’s a much stronger remedy than we’ve seen from other bills,” she said.

Holly Campbell, deputy vice president for public affairs at PhRMA, a trade association representing pharmaceutical companies, said Brown’s plan would take the “unprecedented step” of allowing the U.S. government to nullify a manufacturer’s patents. Doing so, she said, would discourage innovation.

Her association is far more supportive of the proposed PBM rules, arguing that that negotiated discounts and rebates from PBMs often don’t go to patients, meaning the sickest patients pay higher out-of-pocket costs to subsidize the healthy.

Capretta said he worries government negotiation of drug prices could ultimately be damaging.

“The government is a very clumsy and heavy-handed participant in those kinds of negotiations,” he said. “The government doesn’t really negotiate with anybody. It’s really more a price setter than a negotiator.”

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