Should the Federal Government Intervene to Lower Prescription Drugs Costs?
A prescription drug is a medication that may only be obtained with a medical professional’s recommendation and authorization. With 79% of Americans saying prescription drug costs are “unreasonable,” and 70% reporting lowering prescription drug costs as their highest healthcare priority, the popular prescription drug debate is not whether drug costs should be reduced but how to reduce prescription drug costs. One consideration is whether the United States federal government should regulate prescription drug prices. For more on the prescription drug costs, explore the ProCon debate.
“For far too long, Americans have paid more for prescriptions drugs than any major economy. But now, thanks to the Inflation Reduction Act, Medicare can directly negotiate prescription drug prices to get a better deal for seniors. Today, Medicare has for the first time selected 10 drugs for negotiation. Seniors paid $3.4 billion in out-of-pocket costs for these drugs in 2022.
Big Pharma has long fought this progress. Their profits grew as they spent more on stock buybacks and dividends than they spent on research and development, even as nearly three in ten Americans struggle to afford their medications because of cost.
Today, the Biden-Harris Administration is delivering on another significant milestone in implementing President Biden’s historic law to lower health care and prescription drug costs and ushering in a new era for American seniors. Over the next 4 years, Medicare will negotiate prices for up to 60 drugs covered under Medicare Part D and Part B, and up to an additional 20 drugs every year after that.”
Editors’ Note: The Centers for Medicare and Medicaid Services (CMS) offer a list of the first 10 drugs eligible for price negotiation.-
White House, “FACT SHEET: Biden-Harris Administration Announces First Ten Drugs Selected for Medicare Price Negotiation,” whitehouse.gov, Aug. 29, 2023
“Congress and the Administration have an opportunity to demand greater PBM [pharmacy benefit manager] transparency and pass-through of negotiated savings to patients at the pharmacy counter. They can ensure that patients aren’t bearing the burden for soaring PBM profits. States like Texas are leading the way, but it’s time for the federal government to join in to reduce prescription drug spending for all.”
Editors’ Note: Pharmacy benefit managers negotiate rebates and savings on behalf of health insurance companies, Medicare Part D drug plans, large employers, and other groups. These agreements, however, are generally not publicly disclosed so actual cost savings to patients are unknown.-
Chris Christie, “Opinion: Reforms Will Lower Prescription Drug Costs for Patients and Taxpayers,” statesman.com, Oct. 12, 2022
“We’ve moved [in Florida] to hold Big Pharma accountable by shining a light and reining in things like pharmacy benefit managers that cause you to pay more for expensive medication.”
Editors’ Note: DeSantis is referring to Florida’s Prescription Drug Reform Act, which he signed on May 3, 2023. According to the Governor’s office the law will, “require accountability among pharmaceutical middlemen, empower consumers through increased choice among pharmacies, and create transparency in prescription drug price increases.”-
Alexandra Glorioso and Nicholas Nehamas, “How DeSantis Is Trying to Lure Older Voters Away From Trump,” nytimes.com, May 22, 2023
Source for Editors’ Note: Ron DeSantis, “Governor DeSantis Signs Most Comprehensive Legislation in Florida History to Increase Accountability and Transparency for Prescription Drug Costs,” flgov.com, May 3, 2023
“Audience member: How would you help lower our prescription drug prices?”
Ramaswamy: “Great question. And this is something… that is very personal to me because I began my career actually in the biotech industry developing medicines. And I saw from the front lines… probably the biggest invisible monster that is actually responsible for raising drug prices in this country that almost no one sees. That is the FDA [Food and Drug Administration]. Ok the FDA imposes the kinds of hurdles needed to develop a new medicine that make it far more costly than it needs to be. Billions of dollars and over ten years for a new medicine. That means when that hurdle is that high, that cost gets passed on to the consumer. So when it comes to prescription drugs, especially when it comes to innovative pharmaceutical products, the FDA is something that the next president can actually reform.
The second thing we need is more generic competition. Here the FDA plays a different role, too. Generics are supposed to hit the market when a patent expires. Companies play a lot of games. Pharma [pharmaceuticals] is a corrupt industry, but they only respond to the incentives that they’re given by a complex bureaucracy and government. And, so, I’m going to reform that. I’m going to simplify it. Streamline the process for getting new medicines to market. That’s great, maybe the pharmaceutical folks will like that. The part they won’t like it also making sure that generics get to market when they’re supposed to, rather than being delayed in what is really a corrpt process. And I know how to fix it.”-
Adam Sexton, “Vivek Ramaswamy Answers New Hampshire Voter Questions about Lowering Prescription Drug Prices, Continued Us Support for Ukraine,” wmur.com, May 12, 2023
“The President signed four sweeping executive orders on Friday, which together will significantly lower the cost of prescription drugs while increasing access to life-saving medications such as insulin:
The first order directs federally qualified health centers to pass along massive discounts on insulin and epinephrine from drug companies to low-income Americans.
The second order will allow the safe, legal importation of prescription drugs from Canada and other countries where the price for identical drugs is lower.
The third order will prohibit secret deals between drug manufacturers and pharmacy ‘benefit manager’ middlemen, ensuring patients directly benefit from available discounts at the pharmacy counter.
The fourth order ensures the United States pays the lowest price available among economically advanced countries for Medicare Part B drugs. The United States often pays 80 percent more for these drugs than other developed nations.
‘The four orders that I’m signing today will completely restructure the prescription drug market, in terms of pricing and everything else, to make these medications affordable and accessible for all Americans,’ President Trump said.”
Editors’ Note: The four executive orders were not implemented by the Trump administration before a Biden administration freeze for review (1, 3, and 4) or a block by Canadian export rules (2).-
Trump White House Archives, “Congress Didn’t Act on Prescription Drug Prices. So President Trump Did,” trumpwhitehousearchives.gov, July 27, 2020
Sources for Editors’ Note: JDSupra, “Biden Administration Already Impacting Drug Prices,” jdsupra.com, Feb. 17, 2021
Rachel Tillman and Associated Press, “Canada Limits Drug Exports in Response to Trump Import Plan,” spectrumlocalnews.com, Nov. 30, 2020
Not Clear or Not Found
Editors’ Note: Governor Burgum signed House Bill 1032 on Apr. 27, 2021, which includes disclosure requirements for pharmaceutical companies: “(1) quarterly Wholesale Acquisition Cost (WAC) reporting, (2) disclosure of certain information upon a drug price increase, and (3) notification when introducing a new drug with a WAC that exceeds certain price thresholds.” The law does not specifically lower drug costs or advocate for lower drug costs, though some advocates believe transparency laws are a first step toward laws and policies that would lower drug costs.-
Sources for Editors’ Note: InForum, “North Dakota Will Start to Open the ‘Black Box’ on Prescription Drug Prices with New Transparency Law,” inforum.com, July 30, 2021
Thomas Sullivan, “North Dakota Enacts Price Transparency Law,” policymed.com, June 13, 2021