The Pharmaceutical Research and Manufacturers of America (PhRMA), the trade group for drug makers, produced the ad on the left that has been called misleading. The AARP produced the ad on the right calling out PhRMA for attempting to scare seniors into opposing efforts in Congress to pass drug-price reforms. (Photo courtesy of PhRMA and AARP’s YouTube video ads.)
Last week, Aimee Picchi reported for CBS News on a new Gallup and West Health survey showing that 18 million Americans (7% of U.S. adults) cannot afford the medications their doctors prescribe.
Households with annual income under $24,000 struggle even more, she wrote, adding that almost 20% of those Americans were unable to pay for at least one prescription drug in the previous three months. To save money, about 10% of all adults skipped a pill in the prior year, she noted. Gallup and West Health surveyed some 5,000 adults in June.
Picchi made two important points for journalists to consider when writing about efforts in Congress to reform how much Americans pay for prescription drugs.
- First, the continuing rise in prescription drug prices affects all Americans while millions are already struggling to pay for their health care, even if they are insured, she wrote. In June, the AARP Rx Price Watch report revealed from 2006 through last year, the retail prices of 260 commonly used medications increased 2.9% while the general rate of inflation over that time was 1.3%. In her article, Picchi cited a report from the U.S. House Ways and Means Committee in 2019, “A Painful Pill to Swallow: U.S. vs. International Prescription Drug Prices.” In that report, the Democratic-led committee showed that between 2012 and 2016, drug prices increased almost 25% while the use of medications in that time rose by about 2%.
- Second, Picchi explained that what Americans spend per capita on prescription medications is the most among the 12 nations cited in the Ways and Means report. “At more than $1,200 per person in the U.S., that’s double the average spending by people in countries such as Germany, the United Kingdom and Japan,” she wrote.
Another perspective for journalists to consider
On Monday, Rachel Cohrs reported for STAT News on which companies support drug-price reforms and which oppose them. While employers want to keep their prescription-drug and other benefit costs low, other companies, including pharmaceutical manufacturers, seek to undermine drug-price-reform efforts, she wrote.
So far this year, the U.S. Chamber of Commerce spent $29.6 million to influence government policy, and the Pharmaceutical Research & Manufacturers of America, the drug industry’s trade group, spent $15.7 million, according to data from Open Secrets, Cohrs noted.
“Where business groups stand is an especially important dynamic because one of the most controversial parts of Democrats’ drug pricing negotiations is how far reforms would extend to employer-sponsored insurance,” Cohrs wrote. The chamber has called the Democrats’ drug-pricing reform efforts dangerous and unwelcome government price controls, she noted. “But other groups representing the largest businesses in the country, including Walmart, Tesla, Apple, Microsoft, IBM, Boeing and The Walt Disney Company, have demanded wide-reaching reforms to help lower the cost of insuring their employees,” she added.
Medicare sets the rates it pays for physician and hospital services but cannot set drug prices.
In reporting on pharmaceutical-industry efforts to frighten seniors about possible changes in Medicare, Glenn Kessler, The Fact Checker at The Washington Post, explained why drugs are exempt from federal cost-control effort. During negotiations in 2003 over passage of the Medicare Part D prescription drug program, Congress inserted the “noninterference clause” into the law.
“That provision prevents the federal government from having a direct role in negotiating or setting the prices for drugs in Medicare Part D, which are offered through pharmacies via private health plans,” Kessler wrote. “The prices currently are negotiated between manufacturers, private health plans and pharmacies.”
Under H.R. 3, the Elijah E. Cummings Lower Drug Costs Now Act, Democrats in Congress have proposed allowing federal officials to cut prices by negotiating with drug makers. Provisions in H.R. 3 could reduce federal drug spending by $456 billion and increase revenue by $45 billion over 10 years, according to an analysis from the Congressional Budget office (CBO). Last spring, the Commonwealth Fund cited that CBO analysis in a report, Allowing Medicare to Negotiate Drug Prices, to show that If passed as is, H.R. 3 would include savings under Medicare Part D, reduce spending for the Affordable Care Act’s subsidies for commercial health plans and cut spending for the Federal Employees Health Benefits Program.
Also, the bill would increase federal revenue from employers because reduced health insurance premiums would allow employers to increase wages and thus increase taxes they pay on those wages, the Commonwealth Fund noted.
Independent analysis needed
The whole issue of drug-price reform is so important that groups on both sides are paying for competing television ads. The drug industry uses what Kessler called “Mediscare” ads on television to promote its view with what he labeled as false claims. On the other side, AARP has spent $4 million to push back on those false claims.
One of the pharma companies’ arguments is that cutting what the government pays for drugs would affect their ability to develop new medications. For a detailed analysis on that issue, the CBO analyzed how legislative proposals could affect new drug development in a report, CBO’s Simulation Model of New Drug Development: Working Paper 2021-09.
For an independent look of the drug-price issue, check out the work of the Council for Informed Drug Spending Analysis (CIDSA), which brings together experts to provide consensus on evidence-based policies to reduce drug spending. In a report last week (Sept. 23), “Will Reducing Drug Prices Slow Innovation?” CIDSA reported that a significant factor driving up drug prices are the high prices drug companies set when introducing new drugs. “High launch prices for new drugs are the greatest driver in drug spending growth,” CIDSA said. To counter this trend, CIDSA recommends limiting launch prices using an inflation-adjusted and innovation-weighted model for price setting.
For another independent assessment, see “A framework for categorizing and analyzing prescription drug pricing reform options,” from the Brookings Institution, a think tank. The Brookings’ experts recommend that policymakers focus on consumers’ out-of-pocket costs, the high prices of some drugs and the financial incentives that drive up costs.
