Supporters say the proposal would reduce the price for drugs such as Lipitor and Lopressor. Critics aren’t so sure.
Vermont Senator Bernie Sanders and California House Representative Ro Khanna have proposed new legislation seeking to drastically reduce the price of pharmaceutical drugs in the United States.
It’s a popular goal. According to a Kaiser Health Tracking Poll released last April, 60 percent of Americans said that lowering the price of prescription drugs should be a “top priority” for Congress and the Trump administration.
The current administration’s efforts to curtail drug prices have worked to some extent. There were 57 percent fewer price increases on brand-name drugs last year compared to 2017, according to Health and Human Services Secretary Alex Azar.
But they’re still rising.
“Some manufacturers are still in denial about whether bringing down list prices is even an important goal,” Azar said at an event by the Council for Affordable Health Coverage. “They claim that these skyrocketing prices don’t matter. But these prices do matter to patients, in a number of important ways.”
The Sanders-Khanna legislation, the “Prescription Drug Price Relief Act of 2019” would attempt to lower drug prices across the board by using three levers.
The first is linking the United States’ prescription drug prices to the median price among five countries: France, Germany, Japan, Canada, and the United Kingdom.
The second would empower the secretary for Health and Human Services (HHS) to negotiate prices in Medicare Part D.
The final lever would end a ban on allowing Americans to buy prescription drugs from other countries, such as Canada.
Those last two proposals are especially popular among Americans. About 92 percent say they favor allowing the federal government to haggle with drug companies over Medicare drug pricing. About 72 percent of Americans favor being able to import prescription drugs from Canada, according to a April 2017 Kaiser Health Tracking survey.
So we know this is popular. The question is: Will it work?
First, let’s look at how this model might affect the prices of common drugs.
Under the legislation, the price of a 30-day supply of Lantus, a popular insulin used to treat diabetes, could fall from around $387 to $194, according to the Democratic proposal.
The cholesterol drug Lipitor could drop from $165 for a 30-day supply to $94.
Meanwhile, Lopressor, a beta-blocker used to treat high blood pressure and angina, might drop from $249 for a supply of 100 tablets, to $142.
One key piece of the legislation that has the pharmaceutical industry concerned is the mechanism of enforcement. If companies don’t lower their prices to match the median of the five selected countries, the U.S. government would issue a competitive license to any company that wanted to produce a generic version of the drug — irrespective of patents held by their current manufacturers.
That’s legal under U.S. trade law, but it’s rarely used here.
“Circumventing patent and other intellectual property rights on medical innovation and allowing foreign governments to set U.S. prices would be disastrous for patients,” Nicole Longo, director of public affairs at the Pharmaceutical Research and Manufacturers of America (PhRMA), a trade group representing U.S. pharmaceutical companies, told Healthline.
“It would be unprecedented for the U.S. government to steal patents from biopharmaceutical innovators,” she said. “No countries that are leaders in innovation have taken such drastic measures. Instead, Senator Sanders and Representative Khanna are proposing the United States copy the systems of countries like Malaysia, Colombia, and Russia that have resorted to such measures with no evidence it helped patient access to medicines.”
The nonprofit consumer rights advocacy group Public Citizen has a different take.
“American consumers pay far too much for prescriptions, not because it is expensive to manufacture them or even because of research and development,” the group said in a statement. “We pay too much because the U.S. government grants patents and other monopolies to brand-name manufacturers, then stands aside as Big Pharma exploits those monopolies to price gouge consumers and the government itself.”
Those are two differing characterizations from groups on opposite sides of the spectrum.
A recent study from the University of Pittsburgh suggests, however, that research and innovation may not be the primary cause of increased drug prices.
They found that the cost of oral and injectable brand-name drugs has increased an average of 9 percent and 15 percent, respectively, from 2008 to 2016, “largely driven by existing drugs,” rather than innovative new products.
Meanwhile, specialty versions of oral medications have seen a 21 percent increase while injectables have climbed 13 percent, the study shows.
“It makes sense to pay more for new drugs because sometimes new drugs are more effective, safer, or treat a new disease you didn’t have a treatment for. Sometimes new drugs do bring more value,” said Inmaculada Hernandez, PharmD, PhD, an assistant professor at the University of Pittsburgh School of Pharmacy and lead author of the study. “But the high year-over-year increases in costs of existing products do not reflect improved value.” The Sanders-Khanna plan proposes a model called “external benchmarking,” which is used by 29 out of 31 European countries to help set drug prices, according to a 2017 report by the Pew Charitable Trusts.
Furthermore, countries such as the Netherlands attributed a 20 percent drop in pharmaceutical drug prices when they began to use this method in 1996.
The problem with this plan, however, may lay not in its enactment and enforcement, but rather in the drug companies’ ability to adapt to it over time.
“The practice remains controversial because of its potential unintended effects,” the Pew report reads. “The Organization for Economic Cooperation and Development has criticized external benchmarking since it creates incentives for drugmakers to inflate list prices by launching products first in those countries that allow them to set higher prices.”
In the short term, however, the report suggests the model proposed in the Sanders-Khanna plan could make a difference.
“Because of the sizable gap between U.S. prices and those of other nations, international benchmarking by Medicare (in Parts B and/or D) could have a significant impact,” the report reads.
Ginger Vieira contributed to this report.