Donald Trump doesn’t typically take my advice. But if he really wants to turn around his presidency with a victory that would bring together both parties and win praise from the public, he could try something novel in politics: actually solving a problem.
At a Senate hearing last week on a bill that would fund the Food and Drug Administration, virtually every member agreed that prescription drug prices are the No. 1 topic they hear about from constituents. Americans pay more for medications than people in any other country, with stories of sudden price spikes on EpiPens or asthma pills or insulin breaking nearly every week. The most expensive treatments cost nearly twice as much as the average annual income. Patients have taken to swapping drugs on Facebook that they cannot afford at the pharmacist.
Prescription drugs may not be the costliest part of our health system, but they’re the fastest-rising charge that hits individual pocketbooks directly. The demand for legislative reform is palpable; every politician in Washington has an interest in defusing the drug price explosion. But as close as victory sits, it’s also just out of our grasp.
The Senate’s Health, Education, Labor, and Pensions (HELP) Committee hearing on the FDA bill, which would re-authorize user fees paid by drug companies to partially fund the approval process, showed how available a policy resolution could be. Some bipartisan advances made it into the markup. Sens. Elizabeth Warren (D-Mass.) and Johnny Isakson’s (R-Ga.) plan to sell hearing aids over the counter would increase access for the hearing impaired at an affordable price. Sens. Al Franken (D-Minn.) and Susan Collins (R-Maine) passed a measure that would have the FDA review any generic drugs in “sole source” noncompetitive markets within eight months.
Committee Chairman Lamar Alexander (R-Tenn.) has agreed to a rare bipartisan hearing on high drug prices in the coming weeks. Even Health and Human Services Secretary Tom Price has been hearing out patient groups and pharmacists in recent meetings. In theory, you can’t find a more unifying issue in Washington.
There’s so much waste and excess to tackle in the U.S. drug system, it’s hard to know where to begin. Sen. Bernie Sanders (I-Vt.) wants Americans to be able to import prescription drugs from Canada, where prices are much lower. “If we can get vegetables and fish and poultry from all over the world, please don't tell me that we cannot safely import from a nation whose development is as high as we are in health care,” Sanders said.
A similar measure drew 13 Republican votes on the Senate floor in January, but high-profile Democrats like Cory Booker (D-NJ) voted against it. (Booker subsequently worked with Sanders on a new bill that addressed concerns about patient safety.) The HELP Committee tabled the amendment but expected it to return when the FDA bill gets a final vote. But even Bernie might agree that importation is a workaround. We have a big enough population pool to demand far better prices, but we choose not to.
You could start by simply using Medicare’s bargaining power to secure steeper drug discounts. Unconscionably, Medicare was barred from direct negotiations by the 2003 prescription drug benefit law. Even the Trump administration appears to want to change that. White House budget director Mick Mulvaney pointed out last Friday that drug companies aren’t forced to provide mandatory rebates under Medicare, as they are under Medicaid. As a result, Medicaid rates are on average 45 percent off list price, while Medicare pays only 19 percent less. Patients who are eligible for both programs don’t even get access to Medicaid’s cheaper prices. That change alone would save Medicare patients and taxpayers tens of billions of dollars.
Right now, price negotiations under Medicare get outsourced to companies called pharmacy benefit managers (PBMs), which sit as middlemen between manufacturers, health plans and pharmacists, using each as a revenue stream. Only PBMs have perfect transparency over prices. They use control of the system (three PBMs operate nearly 80 percent of the market) to capture rebates for themselves instead of passing them along, and create incentives for prices to rise, so they can take their cut from bigger rebates.
The Pacific Research Institute, as conservative an outfit as they come, just wrote an issue brief (with a fine companion cartoon) on PBMs, showing how they essentially profit off confusion among the other players in the supply chain. Just increasing transparency and making sure everyone gets what they pay for would save massive amounts of money, and members of both parties have just such legislation.
If we really wanted to fix the drug pricing system, we would eliminate multi-year patent monopolies granted to manufacturers, ostensibly to justify their research and development costs. We could instead use public prize funds to compensate innovators and then keep the patents in the public domain for all of our benefit. And we can publicly fund clinical trials with all the savings from paying lower prices, maintaining higher levels of scientific advancement while ensuring the entire public can benefit.
Then there’s the point that our reliance on prescription drugs as a substitute for a functioning health care system has led to the tragedy of the opioid epidemic, the worst drug crisis in U.S. history. Sen. Claire McCaskill (D-Mo.) is leading an investigation into how drug manufacturers fueled the opioid crisis through aggressive marketing to patients. But it’s bigger than the manufacturers. Wholesalers who saw millions of opioids pass through their warehouses and into small towns should have raised red flags. PBMs were paid off to keep OxyContin and other drugs on reimbursement lists. The Cherokee Nation, ravaged by opioids, recently sued the top three wholesalers and the retail distributors for their neglect in the face of profits.
I could go on and on, including what Trump could accomplish without Congress. The FDA has authority to temporarily import generics in concentrated markets, or allow bulk compounding to lower costs. Any drug that received federal funding (and that’s most of them) could have its patents licensed under the 1980 Bayh-Dole Act to make the treatment more accessible. There’s so much money swimming around pharmaceuticals and just as many solutions to reduce costs.
But politicians seeking action will have to sneak past the 800-pound gorilla dominating all health care policy debates: Obamacare. Even as they stressed common ground for a win on drug prices, Democrats unilaterally said at the committee hearing that stripping coverage from 24 million people would undermine any advance on the drug front. “If we don't have a working health care system to do these things, much of this is irrelevant,” said Sen. Maggie Hassan (D-NH).
The Obamacare vortex will chew up any effort on drug pricing reform. But Trump could reverse course, realize the big win staring him in the face and take action everyone supports to address high drug prices. That would have the benefit of actually helping people. Imagine that.