In the United States, we spend more on healthcare than any other industrialized nation as a percentage of gross domestic product. According to data from the Centers of Disease Control and Prevention, in 2014, total national health expenditures was $3 trillion dollars — almost $10,000 dollars per person — with prescription drug costs accounting for 10 percent of this number. In 2015, we spent nearly $325 billion dollars on prescription drugs — an increase of almost 10 percent from the previous year. Much of this increase was due to the production of newer, very expensive therapies for ailments such as hepatitis C and hypercholesterolemia.
In the last several years, stories of collusion, price gouging and cover-ups by industry executives have continued to unfold — all designed to improve their bottom line at the expense of patients. Heather Bresch of Mylan, Martin Shkreli and device-makers such as St. Jude Medical have given the pharmaceutical and medical device industry a black eye.
Mylan increased the prices of its EpiPens — putting children with severe allergies at substantial risk. Shkreli took a generic drug used to treat pneumonia in AIDS patients and increased its price from $13 to more than $750 overnight. According to FDA documents, St. Jude Medical may have hidden important safety information (including patient deaths) from its medical advisory board during a time when they were seeking to be acquired.
Insulin prices have risen astronomically, and many suspect collusion among insulin manufacturers (Sanofi, Novo Nordisk and Eli Lilly) as no real increases in production costs have been identified. All the while, type 1 diabetics — like my daughter — depend on insulin daily in order to live.
While most pharmaceutical and device company executives, scientists, and employees are dedicated to helping their customers, these examples are emblematic of the overall problem. Profits are being put ahead of patients and this must be stopped. The American College of Physicians and other organizations have issued position statements on how government may be able to better control skyrocketing drug prices.
What is Happening in DC?
In the election of 2016, more than 50 percent of voters surveyed felt that addressing skyrocketing drug prices was a key issue. Thus far in 2017, Congress has done little to address this issue. While there have been occasional hearings and sound bites from congressional committees designed to put pressure on drug manufacturers, no real reform has been addressed.
The drug lobby is very powerful and is a constant fixture in Washington. According to the New York Times, the drug lobby is spending more than twice what other business are spending and the industry is currently paying nearly 2 lobbyists per member of Congress — amounting to an astounding $78 million thus far in 2017.
Wouldn't this money be better spent on programs to lower drug costs and ensure everyone can afford the medical therapies they need?
Each player in the system — the drug maker, the pharmacists, the pharmacy benefit managers — are all pointing fingers at the other groups when asked why prices are so high. Each has its own self-serving solution. However, the real answer, for better or worse, lies with lawmakers. Those in Congress must act in order to mitigate the continuing climb in drug prices.
What needs to be done?
1. Allow Medicare to Negotiate Drug Prices
It is essential that Congress allow the Centers for Medicare and Medicaid Services and Medicare to begin to directly negotiate the prices of prescription drugs.
For decades, Medicare has paid whatever was negotiated by traditional privately-run prescription drug programs that manage the drug plans for other large employers and insurers. These companies negotiate on behalf of the government and have a financial stake in the process. The pharmaceutical industry has not been supportive of this type of change (for obvious reasons) and has devoted hundreds of thousands of dollars to funding lobbyists on Capitol Hill.
However, having a more traditional bidding process for drugs and devices with CMS would significantly lower prices — particularly given that the U.S. is the largest buyer of pharmaceuticals in the world. Currently, the Department of Veterans Affairs does negotiate prices, and this has resulted in cost savings by creating competition among drug makers. In fact, in the VA system, drug manufacturers must either offer them a discounted price equal to 24 percent off of a drug's average price or the lowest price paid by other (nonfederal) buyers.
2. Allow Importation of Drugs from Foreign Pharmacies
Currently the prices of prescription drugs are far higher in the U.S. than in any other industrialized nation. In Canada, the same medications, manufactured by the same companies, in the same factories, are available for a fraction of the price compared to the U.S.
In Europe, many countries set prices for prescription drugs and pharmaceutical companies accept that rate. The prices charged in the U.S. serve to bolster the industry and fund almost all of the research and development costs (as well as a great deal of executive profits). In February 2017, Sens. Bernie Sanders. I-Vt., Cory Booker, D-N.J., and Bob Casey, D-Penn., introduced legislation to allow pharmaceuticals to be purchased abroad, but the bill hasn't gained traction yet.
3. Speeding Approvals of Generics
While there are a few bills that have been proposed this year in Washington that target the production of generics for drugs with limited competition, patent laws and other protections for the pharmaceutical industry remain. On average, generic drugs cost 80 percent less than name brand drugs and have equal efficacy. In addition, speeding up the process for Food and Drug Administration approval for generics would lower the costs associated with bringing a generic drug to market and in a shorter amount of time. Under proposed legislation, the FDA would have to review generic applications in no more than 8 months.
4. Accountability for Predatory Pricing and Gouging
Just this week, Mylan has been accused of overbilling the federal government for EpiPens by nearly $1.3 billion dollars. Mylan has been accused of misclassifying its product in a way that allowed it to charge Medicaid a higher price. While we see fines for the corporate entity levied, rarely do we see the CEO held personally and legally accountable for obvious missteps. In many cases, these executives "cash out" and never face any negative consequences when they advocate for predatory pricing policies within their organizations. We can no longer tolerate this type of behavior that puts individual profits ahead of patient care and safety.
Kevin Campbell (@DrKevinCampbell) is a contributor to the Washington Examiner's Beltway Confidential blog. He is an internationally-recognized cardiologist and medical, health, and wellness expert. He has authored two books and appears regularly on Fox News, Fox Business, CBS and other media outlets.
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