Here We Go Again: Election Time Creates a Drug-Price Circus

Sep 23, 2019 | Drug Pricing, News, Price Watch, Transparency

United States House Speaker Nancy Pelosi is leading the charge for the U.S. federal government via Medicare to negotiate drug prices for high cost drugs in Medicare and the marketplace under a plan that the lawmakers hope would rationalize drug prices. The plan would allow the government to directly negotiate for drugs lacking in competition similar to models in other countries. With 25 drugs subject to direct negotiation, the plan falls far short of the progressive Democratic wing that sought full negotiation of all drugs for Medicare. It goes too far to the “Left” for others.

Scope Beyond Government

Payers would also benefit from the negotiation law as health insurers would be able to capitalize on the lower drug prices negotiated for the 25 identified drugs. Of course, this is still early in the process and, knowing how Congress works, it will go through the “sausage factory” that is the bill making process as various committees and individuals representing various interest groups will assert their case.

PhRMA Denounces as “Radical”

The industry’s association, PhRMA, denounced the plan suggesting that other methods, such as cost transparency and adjustments to payer coinsurance for consumers. We happen to agree with them on those points and disagree on others.  Although most advanced national market-economies (e.g nations in Europe and Japan) consider health care and drug prices a national interest (such as defense) and hence may have some governmental involvement in drug price negotiations for federal programs (such as Medicare and Medicaid) and hence a government funded and sponsored program that seeks to negotiate prices directly in a market may actually be rational to most working in health around the world.

Steven Ubl, president and chief executive of the Pharmaceutical Research and Manufacturers of America noted, “It would fundamentally restructure how patients access medicines by giving the federal government unprecedented, sweeping authority to set medicine prices in public and private markets while importing price controls from other countries that restrict access to innovative medicines.”

Socialist in Nature?

Republicans on the Energy and Commerce Committee posited that the proposed Democrat-sponsored legislation was a piece of socialist policy driven by the far-left of the Democratic caucus and suggested that in the Senate, bipartisan efforts are underway to solutions they consider more acceptable.

Yet health insurers are not known for their “socialist leanings” and they seem to be in support as it helps their business interests position—Matt Eyles who leads America’s Health Insurance plan, a health insurance association—called the proposal a “bold reform.”

Move the Politicians Out of the Way

Washington now is full of politicians positioning to look like they did something more than the usual bickering as we approach the 2020 election. In January 2019, Rep Elijah E. Cummings, Chairman of the Committee on Oversight and Reform, launched what was claimed to be one of the most wide-ranging investigations into the prescription drug industry pricing practices with the goal to determine why drug companies have been raising drug pricing so aggressively.

Although there are undoubtedly some good intentions underlying the public posturing—to ensure drug prices are set fairly and rationally—the adversarial and very public approach (singling out 12 companies) and associated methods predictably would stir up a strong and visceral reaction. Sure enough, the battle was on and Ranking Member Jim Jordan sent unprecedented letters to 12 drug companies urging them not to cooperate with the Congressional Committee’s ongoing investigation into skyrocketing prices of prescription drugs. Chairman Cummings sent a scathing letter to Jordan in response.

Find a Rational Approach to Systematically Understanding Costs

This Washington symbolic dance approach won’t result in anything good. What we need is a true third-way approach to systematically understanding what the underlying costs of drug development and commercialization truly are by therapeutic area, class of treatment, etc. Laws and associated policies based on a systematic lack of transparency and deep knowledge can’t end up with great outcomes. The Affordable Care Act would be an appropriate example of such an outcome.

TrialSite News is currently sponsoring a drug development transparency project involving a systematic review of, among other things, IND to NDA timelines for approved drugs from 2018 and 2019. We have faced challenges as in many cases it is nearly impossible to access Investigational New Drug (IND) file dates. As we reported recently, the FDA directly told us that this information was proprietary and that we would need to request information from the drug manufacturers directly—really?

As the FDA itself declares present federal law imposes the requirement that a drug must be approved by the FDA before it is transported or distributed across state lines. As the sponsor needs to most often ship investigational product across state lines, the sponsor must seek an exemption from the legal requirement. The IND is the means through which the sponsor technically obtains this exemption from the FDA.

To understand true drug pricing, we must understand the actual costs. This requires that we understand drug development in a systematic and comprehensive way—including clinical trials, which represents one of the costliest inputs of bringing the drug to market. An understanding of actual timelines from IND filing to NDA filing to approval, for example, represents important inputs to the cost equation. But the very public agency that receives the filings from industry sponsors doesn’t make this information accessible to the public.

Transcend our Thinking

Neither publicly lashing out at pharmaceutical companies nor one particular political persuasion will help us transcend what are unprecedented fundamental challenges to a healthcare system that isn’t, well—in fact some call it a “Sickcare” system: one which waits until we become ill prior to any action. One that has become a fundamental driver of gross domestic product (GDP) and, hence, inexorably intertwined with the material wealth of vast interests in the society. The whole system needs to evolve and advance toward prevention, given what we know are the fundamental drivers now of what we fear are to be very bad times ahead—we will pay the debts due from the massive accumulation of chronic disease (many lifestyle influenced)—that will increasingly continue to grow a historically unprecedented national debt. The prescription to this debilitating and ultimately deadly disease: a transcendental prevention mandate—one that also happens to over time reduce health care expenditure as a percentage of GDP as well as contribute to a material reduction in an escalating national debt. It will liberate capital and people (talent) for true societal innovation—whether it be for profit or not.


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