Last week we wrote about a recently issued Executive Order by the White House to hopefully usher in healthcare price transparency from hospitals and insurance carriers, both of whom hold their secret price negotiations close to the vest. We expressed optimism over the order’s ability to tame runaway consumer and employer healthcare costs. Sunlight, after all, is said to be the best disinfectant.
There’s another area of equal concern which has been driving up the cost of employer-sponsored healthcare for quite some time - prescription drug pricing. In a word, it is skyrocketing, with no end in sight.
The price of pharmaceutical drugs is rising 3x faster than wages, and 5x faster than inflation. In fact, more than 3,400 drugs have boosted their prices in the first six months of 2019, an increase of 17 percent in the number of drug hikes from a year earlier. And the average price hike across all prescription drugs stands at 10.5 percent.
A new coalition of health advocate groups was formed in October to make their voices heard on drug price transparency, caps on drug price increases, and other price reducing strategies. The coalition has identified drug manufacturers and pharmacy benefit managers (aka the middlemen) as the culprits, but it’s literally going to take an act of congress to get this under control.
The drug hikes come at a time when (or perhaps because) lawmakers and the Trump administration have vowed to address the problem of rising prescription costs.
Prescription Drug Bills Flying From Both Chambers of Congress (& Both Sides of The Isle)
In what can only be described as a somewhat surprising burst of bipartisan activity last week, it appears as if both sides of the isle are anxious to work together to get some things done before the end of the year, despite impeachment dominating the headlines.
Whether out of a sense of duty, love of country, or for pure political posturing, Democrats and Republicans seem to be finding common ground on new spending, defense and trade initiatives.
The same can’t quite be said for a bill which passed last Thursday, despite sharp Republican resistance, which aims at lowering prescription drug prices – a goal that Democrats, and President Trump have made a cornerstone of their election platforms.
House Speaker Nancy Pelosi tried for months to win support for the bill from President Trump, given that he broke from Republican orthodoxy when he publicly supported government negotiation of drug prices during his 2016 campaign.
Nevertheless, the bill admittedly has no chance in the Republican-run Senate. Most Republicans oppose authorizing Medicare to negotiate drug pricing, arguing the job is better done by private insurers.
The White House also now strongly opposed Pelosi’s bill, arguing that it will keep over a third (100) of new drugs from coming to market in the next decade, an estimate 10x greater than the nonpartisan CBO has calculated. The CBO also estimated that the bill could result in price cuts of 40% to 50% for pharmacy drugs subject to negotiations, cutting industry revenues by $500 billion to $1 trillion over 10 years.
So Why Are We Optimistic?
While the bill has already been declared “dead on arrival” in the Senate, President Trump is backing a competing bill in the Senate - a bipartisan piece of legislation from Senators Chuck Grassley (R-Iowa) and Ron Wyden (D- Ore.) that would require drug makers to pay rebates to Medicare if they hike prices above inflation, much like Pelosi’s bill.
Both the House and Senate bills would also cap what Medicare recipients must pay annually in out-of-pocket costs for their prescriptions, among other commonalities across the two bills, though there are differences between the two as well, to be sure.
This bill is also unlikely to be signed into law. Senate Majority Leader Mitch McConnell (R-Ky.) has said publicly that he’s unwilling to bring up a bill that splits his caucus (and several Republicans have said the measure is akin to imposing price controls, which they have long opposed.)
So Why Again Are We So Optimistic? Well, The Wagons Are Circling
While both bills appear doomed, it does appear as if the wagons are finally circling around the pharmaceutical industry. With Democrats, the White House, and now the GOP all anxious to get something done on prescription drug costs, we are more hopeful than ever that something positive will emerge prior to the 2020 election, which is now less than 11 months away.
Backed into a corner, President Trump may try once again to get something going through an executive order. Early this summer he tried. In a major rose garden ceremony, he announced an aggressive plan to “bring soaring drug prices back down to earth” by promoting competition among pharmaceutical companies, and giving private entities more tools to negotiate better deals on the behalf of consumers, insurers and employers.
It was an ambitious plan, but his efforts were quickly spoiled by lawsuits, including one by a trio of big pharma manufacturers who convinced a federal judge to overturn a requirement that companies include a medication’s list price in direct-to-consumer advertising. Fearful that his proposal to reduce out-of-pocket expenses for older consumers would raise premiums heading into a reelection campaign, he also relented and took his foot off the accelerator for the entire initiative.
We are optimistic the same won’t happen this time around, though the President does have a habit of making grand gestures and statements, only to back peddle over time, most especially when special interests get the opportunity to bend his ear.
What Could Also Tank The Initiative
Already there is blow back from the bipartisanship America witnessed last week. Pundits like Rick Wilson, a Republican strategist, but in no way a fan of President Trump, has chastised Democrats for working across party lines, fearing it weakens their case against painting the President as inept.
We can only hope that the American public, the vast majority of whom want both parties to work together, can make their voices heard as congressmen and women return home over the holiday recess.
To make your voice heard on this subject, reach out to your delegates in congress and encourage them to pass meaningful legislation to curb prescription drug costs. You can find contact information here for Senators and here for Representatives.