Drug companies raised prices on seven popular drugs during 2017 and 2018 without clinical evidence that the drugs had been improved in any way, according to a new report.
The increases cost patients and insurers more than $5 billion, the Institute for Clinical and Economic Review (ICER) found in its report. None of the drugs examined showed evidence of improved safety or effectiveness, the analysis found.
The report looked at the seven top-selling drugs by sales revenue that had price increases of more than two times inflation, as measured by the medical consumer price index.
The culprits, and how much they added to drug spending over two years:
When the price of an essential medicine rose to an unacceptable level, there was only one thing for pharmacist Marleen Kemper to do – start making it herself.
When Marleen Kemper was a child, she watched two of her primary-school classmates get ill. One had a brain tumour, and the other contracted an infection in his gut. Both of them died. Kemper was around ten at the time, and knew that she didn’t want to see another friend perish. She told her parents she wanted to do something that would prevent others dying. She wanted to be a doctor.
But training is hypercompetitive in the Netherlands, where Kemper was growing up. She didn’t quite have the grades. She liked chemistry, so chose a career in pharmacy instead. She studied for six years, and did a residency for another four. Today, she’s a highly respected hospital pharmacist based at Amsterdam UMC’s Academic Medical Center, a cavernous building crafted out of concrete on the south-east fringe of the Dutch capital.
To understand what happened next, you have to understand several things about Kemper. Two date back to her childhood. One was those early experiences of losing friends to illness, which ensured she’ll do everything she can to make sick people better.
The second is that, though she’s highly accomplished, Kemper is self-admittedly hard-headed, and has always had a rebellious streak. She once dyed her hair black to stand out from the crowd. Sometimes she likes to shock people.
Which leads into the third, more recent trait: a steely determination to do right by her patients, whatever the cost. And the cost can be great. In 2017, when the price of a drug to treat a rare genetic disorder skyrocketed, Kemper wasn’t happy. The result was a dispute that’s still going on today and has spread beyond the four walls of the UMC hospital. It’s spread beyond the city of Amsterdam. And it’s even spread beyond the borders of the Netherlands.
Most of us never have to worry about chenodeoxycholic acid (CDCA), one of the two primary bile acids produced by our livers. But for a tiny fraction of us, a rare genetic trait means we end up short.
Having this gene variant prevents the body from creating sterol 27-hydroxylase, a liver enzyme. Without it, the liver won’t convert enough cholesterol into CDCA. The result is an overabundance of other bile acids and substances, which then get pumped out of the liver and through the body, causing untold damage.
The illness that results is called cerebrotendinous xanthomatosis, or CTX. It can cause cataracts, dementia, neurological problems and seizures, but it can be treated. Since the 1970s, the pharma industry has been able to produce CDCA, and so people who need it can supplement their shortage. The system worked well; the drug was relatively cheap for such a niche illness. A year’s treatment cost around €30,000 per patient.
Until suddenly it didn’t. In 2017, Leadiant Biosciences, which was supplying CDCA to these patients in the EU, raised the price of its version of the drug – known as CDCA Leadiant – to over €150,000 per patient per year.
The price increase soon had an effect. The Netherlands has an insurance-based health system, and in April 2018, Dutch insurers – who had been paying for 50 or so patients across the country to receive the drug – balked at the fivefold increase, refusing to pay. Patients unable to pay themselves would have gone without treatment, so Kemper – whose hospital was one of the treatment centres for CTX – stepped in. Amsterdam UMC would produce the medicine for these patients itself, at cost price.
She was upset, she admits. “Patients have a medical need. If those patients with CTX don’t get their medication, they get neurological implications, they get complications with their cholesterol and dementia, epilepsy… it is an essential medicine.”
Anyone wanting to manufacture a drug must get a marketing authorisation to do so. But Leadiant had become the only game in town, the owner of exclusive rights to manufacture CDCA commercially in the EU.
Yet there was a solution. Under EU rules, pharmacies can make (or ‘compound’) a prescribed drug on a small scale for their patients.
So Kemper began researching where she could find the ingredients to make CDCA. It was difficult: in the pursuit of better margins, vast numbers of manufacturing companies have closed their factories across the world and concentrated their efforts in China, where the costs of producing pharmaceutical ingredients are lower. Just one European company manufactures the ingredients to EU standards.
Kemper approached them, and they declined to supply her the raw material. In the end, she found a Chinese manufacturer instead. She went to the hospital’s executive board and gained approval to manufacture the drug. It cost the pharmacy €28,000 per patient per year – pretty much exactly the same as the price of the drug beforehand.
CDCA wasn’t initially used to treat CTX. Originally it was developed to treat gallstones. This main use of the drug – which from the mid-1970s had been sold in the Netherlands as Chenofalk – became outmoded when the standard procedure to deal with troublesome gallstones became to just cut out the gallbladder entirely.
At the turn of the millennium, Dutch doctors started using Chenofalk off-label to treat CTX – a practice that carried on for several years. At this time, in the mid-2000s, a year’s supply of the drug cost less than €500.
But in 2008, Leadiant acquired the rights to Chenofalk. Then, nine days before Christmas 2014, it succeeded in getting its version of CDCA classified as an “orphan medicine” for treating CTX. That classification gave Leadiant the exclusive right to manufacture its CDCA drug commercially in Europe for the next ten years. Leadiant then took Chenofalk off the market in 2015.
Introduced by EU regulation in the year 2000, orphan drug classification is given to drugs that treat serious illnesses that affect fewer than five in every 10,000 people in the EU. Its purpose is to help companies recoup the costs of developing treatments that would otherwise be unlikely to generate a profit. Without it, the pharma industry wouldn’t be incentivised to seek new drugs for the rarest diseases.
But in this case, CDCA was already known as a CTX treatment, with Chenofalk having been used off-label to treat it for years. Kemper believes that Leadiant is getting the financial benefits of orphan designation, but for a drug that had gone through development and been released to market long ago. “There were publications already in the 1980s,” she says. “There’s no patents, nothing. It’s really bizarre.”
Kemper isn’t the only one concerned about the price rise and CDCA’s orphan drug status. In September 2018, a lobby group, the Dutch Pharmaceutical Accountability Foundation, asked the Dutch competition authority to investigate the price increase. And this spring Test Achats, a nonprofit consumer-protection organisation in neighbouring Belgium, lodged a complaint against Leadiant with the Belgian Competition Authority.
“We noticed that in 2005, the price for the treatment of a patient in one year was around €500. Now it’s more than €150,000,” explains Laura Marcus, legal counsel to Test Achats. “It’s bad for the sick person but also for the Belgian health system, which is paying most of the [cost of the] treatment.”
When a drug company raises the price of its treatment, and a hospital pharmacy decides not to accept the increase but instead endeavours to compound its own version, undercutting the drug company’s price, things tend to get interesting.
In June 2018, Kemper received a phone call from the Dutch health inspectorate. It had received a letter of concern – who it came from, Amsterdam UMC doesn’t know, though the health inspectorate has said it was acting in response to an enforcement request from Leadiant – with a long list of things for the investigators to check.
Kemper took the news in her stride. She had expected a rocky road. “As a pharmacist, I am a professional and I know what I’m doing, and we have standards for compounding,” she explains. So she wasn’t worried when a team of four inspectorate monitors turned up at the door of her pharmacy in Amsterdam that summer. Two were there to take samples of the raw materials she was using to compound CDCA, and to ensure that all the correct processes were being followed. They rifled through the reams of paperwork and procedures that Kemper had spent hours developing for her staff to follow, while the other two inspectors combed through coverage of the case to ensure that Kemper and her team weren’t advertising their work, which isn’t allowed for medicines that haven’t been given market authorisation.
The lab checked out: its processes were up to standard, and the paperwork was all in order. But in July Kemper got a phone call that floored her: the inspectorate’s analysis of the raw materials her pharmacy was using to compound the CDCA had discovered that they weren’t up to snuff. Two components found in it were above allowed limits.
“As a professional you think: what did I miss? It was very emotional, a bit heavy,” she says. With the board of directors at the hospital, Kemper decided to immediately withdraw the product from patients; the health insurers said they’d step in and cover putting the patients back on the Leadiant version of the drug.
Kemper personally called the 50 or so patients she was providing with the drug. “The first one was hard,” she admits. “I expected they’d be angry or something like that. But no, no one [was]. The patients said: ‘Well, please go on with this job.’”
The Dutch inspectorate has said that Kemper can resume compounding CDCA provided she can find a raw material that doesn’t contain impurities – something Kemper is keeping tight-lipped about.
So, if she can get the materials she needs, Kemper is hopeful to be able to continue compounding CDCA in the future.
But for now, it’s back to square one – paying the full price for CDCA Leadiant.
These events have had wider consequences. What was initially a dispute inside the Netherlands has bled across borders, with Belgian patients with CTX now being affected.
It started with a conversation between the Dutch and Belgian health ministers shortly after Kemper’s production of CDCA was halted, says Thomas De Rijdt, head of pharmacy at University Hospitals Leuven. The Dutch minister wanted to know from his Belgian counterpart why Belgian hospitals were able to make the same drug without any issues.
“For Belgium, we have about ten patients,” De Rijdt says. “So ten patients are helped with the preparations from our hospital and the University Hospital in Antwerp.”
These hospitals had been compounding CDCA capsules for CTX patients for years. Leuven had sourced raw materials that had been tested and approved by a laboratory accredited by the Belgian government. But when the case in the Netherlands started entering conversation at diplomats’ dinners, the Belgian government wanted to double-check that its raw materials were OK.
It ran a second battery of tests – with a different accredited laboratory – which came back with a problem. A single impurity was found. The government ordered a quarantine of the raw material and recalled all the CDCA it had made.
“The patients had to return all their medication,” says De Rijdt. Recalling every capsule of the drug from Belgium, and freezing the work of the only two suppliers in the country, meant that people with CTX were suddenly left without any medicine.
“If you know the disease, you know you can deteriorate very quickly,” says De Rijdt. This was a problem. So, he says, the hospital pharmacists, the National Institute for Health and Disability Insurance, the health minister and the pharmaceutical inspectorate hit upon a solution. For a year, the Belgian government would reimburse the costs of Leadiant’s drug, allowing those patients to still be treated (normally the government only reimburses a portion of a person’s health costs, with the rest being picked up by the patient or insurance). Over the course of that year, the relevant authorities would then work together to adapt the requirements a raw material must comply with – to allow versions of drugs with minor impurities, providing they pose no threat to the patient.
“We have bought time to find a solution with the compounding, because we think by compounding we can save healthcare a lot of money for the same quality of therapy,” says De Rijdt. He hopes to have a solution by the end of 2019.
But in early September, things took another turn. Wouter Beke, the Belgian consumer affairs minister, used his price-regulation powers to bring down the price of CDCA Leadiant to just over €3,600 a month – roughly a quarter of the amount Leadiant was charging. If the drug becomes more cheaply available in Belgium, says De Rijdt, then it could end up being exported and available at a lower price elsewhere.
But exactly how this will pan out remains unclear. In the meantime, Beke has urged the Belgian Competition Authority to prioritise investigating Leadiant, following the complaint lodged by Test Achats.
Debate over what constitutes a fair price for drugs isn’t anything new. Nor is it limited to Europe.
Because of his willingness to play the bad guy in the press (and an odd moment when he bought a Wu-Tang Clan record), Martin Shkreli has attracted more criticism on drug pricing than perhaps anyone else. In 2015, Turing Pharmaceuticals, of which Shkreli was CEO, raised the price of its recently acquired antimalarial drug Daraprim, also used to treat AIDS-related illnesses. A pill went from $13.50 to $750 overnight – a 55-fold increase.
Shkreli’s capitalist tendencies were criticised by almost everyone. This was unlike the situation with CDCA Leadiant – there was no argument that this increase was to cover Daraprim’s development costs – and Shkreli himself was unrepentant: “If there was a company that was selling an Aston Martin at the price of a bicycle, and we buy that company and we ask to charge Toyota prices, I don’t think that that should be a crime,” he told reporters.
But the Daraprim situation was just the highest-profile example of a contest that is going on constantly between big pharmaceutical companies seeking to profit from drugs and medical staff on the frontline who worry that such profit-seeking does damage to patients needing treatment. (For what it’s worth, a competitor to Turing Pharmaceuticals announced soon after that it would produce a compound drug containing the same active ingredient in Daraprim – pyrimethamine – for $1 a pill, rather than the $750 Shkreli wanted to charge.)
One front in this battle has recently opened up in the US. In May, more than 40 states filed an antitrust lawsuit against some of the world’s biggest manufacturers of generic drugs, alleging they that have colluded to fix the price of more than a hundred medicines over a number of years. When prices should go down after a drug’s market exclusivity ended, the antitrust lawsuit claims that many prices have instead shot up – in some cases by more than 1,000 per cent.
And back in Europe, the consumer organisation Euroconsumers – of which Test Achats is part – is investigating the prices of other drugs beyond CDCA. “We’ve noticed a few problems with a few other drugs,” says Laura Marcus of Test Achats. “It’s often about drugs that are able to cure or deal with rare diseases. For sure, it’s not only CDCA.”
No one doubts that developing drugs costs money. A 2016 paper in the Journal of Health Economics estimated that the average cost of developing a prescription drug to the point of reaching the market is nearly $2.6 billion.
But the lack of hard, openly available statistics on the cost of drug development is something that many people, including Marcus and Marleen Kemper, want to change. “In most of the cases, society is willing to pay some price,” says Kemper, “but now the discussion is: what is an acceptable price?”
Marcus acknowledges that Leadiant has to cover its costs, but she thinks that cannot explain the rise of CDCA to over €150,000 – “the profit cannot be that high”. When I ask her how much profit she thought Leadiant was making from the drug, she admits she doesn’t know. “Of course we don’t have access to those numbers,” she says. “That’s what the Belgian Competition Authority is opening an inquiry for – to know more about the figures and the costs the company has to bear.” However, when the price for CDCA has surged from €500 to over €150,000, “nothing justifies it, because there was no new research, no new nothing,” she says.
Leadiant rejects this. Although CDCA had been authorised in the past, the company says that “the active pharmaceutical ingredient as well as the manufacturing of the finished product needed to be upgraded” to make sure that its version was compliant with current EU standards. These, Leadiant says, are more extensive and significantly more strict today than they were when earlier CDCA drugs were developed.
Leadiant says that its CDCA “is not a ‘copy’ of an old product”. The very fact that it gained orphan drug status proves this, it argues. The company also says that “there was no robust evidence that CDCA was effective in CTX until Leadiant produced the data”. Demonstrating this, it says, required “entirely new studies, creating new data sets” – which make up “the largest ever collection of clinical data for CTX”.
“CDCA Leadiant has been developed and brought to market at substantial cost,” the company says. “Our pricing is justified by our costs and investments.”
But the problem is not just that Leadiant’s drug is so expensive: potential alteratives have disappeared. Willemijn van der Wel, a lawyer working at European law firm AKD, has written about Leadiant’s connection to competitors who previously produced CDCA. After buying the marketing authorisations for other products that contained CDCA, he says, “Leadiant began to withdraw these alternative CDCA products from the market, until only one CDCA medicinal product remained”. Marcus has also queried what has happened to these products that might have been competitors to Leadiant’s. But, she says, it’s not clear what is behind their CDCA monopoly.
Leadiant, though, says that it’s willing to negotiate a lower price for its drug with the Dutch Ministry of Health and Dutch insurance companies. “The only reason an improvement has not been determined yet, is that the insurers have been uninterested or unwilling to enter into any substantive negotiations,” it claims. (Leadiant did not respond to follow-up questions asking for more details of the negotiations, or what level of price reduction the company was offering.) It also emphasises that it has not taken legal action against the UMC hospital for seeking to compound its own CDCA, but that it is “involved in a legal discussion with the Dutch Inspectorate about the interpretation of EU and Dutch medicines law”.
Regardless of the outcome of such discussions, something needs to be done. Having pharmacies self-compound medicines is not a sustainable model – it might reduce incentives for developing drugs for rare conditions.
It also, Leadiant argues, exposes patients to risk. Pharmacies do not have to have their compounding processes checked by the European Medicines Agency or the national regulator. “There is no product control by any independent regulatory authority before or after compounding.”
When it comes to market authorisation and orphan drugs, Leadiant says, “it should not be about small or large scale, but safe scale”.
Marleen Kemper’s husband warned her that taking on Leadiant would be more difficult than she first thought. “He said, ‘With this initiative, don’t be naive’,” she recalls. “The pharmaceutical industry is very powerful, so you really have to have back-up from the [hospital] board” – which she had. More than a year into her attempt to make her own version of the drug, she’s recognising just how deeply dug in both sides are to their positions.
She’s at pains to point out that she’s not against the pharma industry. “What people forget is that the pharmaceutical industry is responsible for a lot of innovation.” But if drug pricing means that patients potentially get left behind? “Then I’m getting angry,” she says.
But righteous anger alone can’t sustain someone over a months-long case involving lawyers and regulators, not least when they’re also raising a family, running part of a pharmacy that’s actively studying hundreds of drugs, and doing their job keeping patients supplied with medicine. At times Kemper has felt frustrated and worn down by the effort of taking on the price rise – but she vows to continue.
“I’ve said that sometimes I’ve thought, well, I’ll stop and quit doing it because it’s too much work, too emotionally draining. But due to the support, I think we’ll go on. I’m patient,” she says. “It has to be solved, for the patients.”
Kemper’s determined that she’s going to provide affordable care for her patients by following the letter of the law. “I’m using the rules,” she says. “I’m not cheating.” Leadiant, she accepts, has used the rules and followed them to serve its own purposes. So she will too.
“I’m allowed to make medication for patients. They don’t like it? So what. I’m following the rules.”
Is the rapidly rising cost of employer-sponsored health insurance sustainable?
Half of all Americans get their health insurance through work. Trouble is, doing so is becoming less and less affordable — especially for already low-wage workers.
In 2019, the Kaiser Family Foundation Employer Health Benefits Survey — an annual account of roughly 2,000 small and large businesses’ employer-sponsored insurance — found the average annual premium to cover a family through work was a whopping $20,576, and $7,188 for an individual. Employers cover most of that, but families still contributed an average of $6,015 in premiums, and single Americans covered about $1,242 of the annual cost.
The kicker? Over the past 10 years, the cost of the portion of employer-sponsored health insurance premiums that falls on American families has increased by 71 percent. Overall, premiums have gone up 54 percent since 2009. That’s faster than the rate of inflation and faster than the average wage growth.
Nearly half of all Americans get their health insurance through work, a system that covers roughly 153 million people. And for lower-wage workers it’s a system that is increasingly unaffordable.
Workers at companies with a significant number of low-wage employees (which the Kaiser Family survey quantifies as a company in which at least 35 percent of employees are making an annual salary of $25,000 or less) have lower premiums than those who work at companies with fewer low-wage workers, probably because their plans cover less. But at the same time, workers at firms with a significant number of low-wage employees are faced with high-deductible plans, and also pay a larger share of the premium cost than workers at companies with fewer lower-wage employees.
According to the survey, workers at lower-wage companies pay an average of $7,000 a year family plan — $1,000 more than employees at companies with higher salaried workers.
“When workers making $25,000 a year have to shell out $7,000 a year just for their share of family premiums,” Drew Altman, the president of Kaiser Family Foundation, said in a statement, that’s where cost becomes prohibitive. Such employees are putting almost 30 percent of their salaries toward premiums.
The takeaway is clear. Health care is getting more and more expensive, and families and employers are having to bear more of the cost, which research has shown not only has an effect on how much workers are actually getting paid, but how many workers are hired.
As Sarah Kliff reported for Vox, there are a lot of studies spanning decades that show how a rapid rise in health insurance premiums has unfavorable outcomes for workers. This is in large part because employers think of compensation in totality; they lump together an employee’s salary, as well as their benefits as one total cost. So if covering a worker’s health insurance gets more and more expensive, employers see less room to give the worker a raise.
For example, a 2006 study from Katherine Baicker and Amitabh Chandra, both with the National Bureau of Economic Research, found that an overall 10 percent increase in health insurance premiums reduced wages by 2.3 percent and actually reduced the probability of becoming employed by 1.2 percent.
Results such as these, and the high premiums low-wage workers must pay, led the Kaiser survey’s authors to explicitly question the tenability of employer-sponsored insurance: “the national debate about expanding Medicare or creating public program options provides an opportunity to step back and evaluate how well employer-based coverage is doing in achieving national goals relating to costs and affordability,” the report reads.
The United States is unique in its reliance on employers to provide health insurance. And, as Democratic candidates for president continue to go in circles debating health care, employer-sponsored insurance is often the biggest sticking point.
Several candidates, like Sen. Bernie Sanders, who popularized a plan for Medicare-for-all, a single government-run program, and Sen. Elizabeth Warren, who supports Sanders’s plan, have called for getting rid of the employer-based system, and private insurance, all together.
But their critics always bring up the same talking point: that the people who like their health insurance plans through work, should be able to keep it. The Kaiser survey raises questions as to how affordable those plans really are, and, as Democrats debate ideas like Medicare-for-all, how sustainable the current trajectory is.
The debate over healthcare and how it should proceed has apparently come down to either keeping what we’ve got, going back to what we had, or Medicare for All. At least, that’s how things are being framed for a coming presidential election. At stake is the cost and delivery of 17.9% of the country’s entire gross domestic product—$3.5 trillion in 2017 and heading north from there.
There have been previous attempts, of course, to change healthcare, whether the addition of Medicare and Medicaid under Lyndon Johnson, Bill and Hillary Clinton’s unsuccessful attempt to reshape the healthcare system, the addition of prescription drug coverage to Medicare signed by George W. Bush, or the Affordable Care Act under Barack Obama.
As a country, we periodically seek a better approach to healthcare—this way, that way, but not straying far from where we were. Understandable, to a (small, these days) degree. There is no guarantee that a quick change won’t cause more problems than it solves. Some people like their coverage, it’s true. But a great many do not.
Importantly, the day is coming (if it’s not right here) that most people can’t afford reasonable care. Average annual premiums for employer-sponsored healthcare for a family have reached $20,576, according to a survey by the Kaiser Family Foundation. Of that, $6,015 are paid by the employee and $14,561 by the employer.
The problem of cost is immense, especially when overall healthcare in the U.S. ranks as mediocre at best (which doesn’t mean good care isn’t available, but more likely is an indication of how relatively few people obtain it).
But many who have a vested interest in the system as it exists, whether for political or financial gain, loudly exclaim that any sort of solution that involves government as an insurer—like Medicare, which many participants prize given much lower rates than typical market-based programs—becomes untenable. “Can you afford how much taxes will go up?” they say.
Some voices have pushed back and we need more, because the question is a loaded one. Government-sponsored insurance would reduce the need for and expense of private insurance.
At issue is an analytic approach often used in business: the total cost of ownership. When taking up a new technology or operational strategy, a smart company analyzes the full costs. Not just the obvious price tag, but all that accompanying costs. It’s the corporate equivalent of an informed car buyer, who, beyond sticker price, is interested in the likely costs of fuel and maintenance, how well the vehicle maintains price in the used or trade-in markets, reliability, and other factors that represent accompanying expenses.
Taxes under a Medicare for All approach would go up. But, at the same time, commercial premiums come down (even if, as with Medicare, many people buy supplemental insurance to expand coverage). There may lower out-of-pocket costs, as is true in many countries with some sort of national coverage.
There is also an argument for resulting higher worker pay. Companies no longer be paying that $14,561 could shift that savings, or at least some, into additional wages or salary. Not increasing pay would effectively be a tax cut, as benefits are part of compensation.
The thought behind healthcare reform like Medicare for All is that it should be possible for the U.S. to do better. To gain improved coverage across the board at lower per-capita prices, as the rest of the developed world has managed to do for decades. People with better care can live better lives, which—and I take this as an article of faith—eventually comes back to communities and the country.
Consideration of changes requires a full understanding of the costs and financial gains throughout the system. Taxes go up, premiums go down, maybe pay increases (should increase), and a sudden illness doesn’t cause automatic financial stress for an individual or a family. Whenever someone makes sweeping claims like “taxes will go up” without context, others should step up and note that it’s like complaining about investing in mass transit without acknowledging that using an automobile to make the same commute will be much more expensive and that one may mean you don’t need the other.
Major legislation to reduce prescription drug costs for millions of people may get sidelined now that House Democrats have begun an impeachment inquiry of President Donald Trump. Proposals had been moving in Congress, but there are more ways for the process to break down than to succeed. Still, nobody says they’re giving up.
Some questions and answers about the legislation and its uncertain prospects:
Q: Why, now, is there a big push to lower drug prices?
A: Some would say it’s overdue. Drug prices emerged as the public’s top health care concern near the end of the Obama administration as people with health insurance got increasingly worried about their costs.
In the 2016 campaign, Trump and Democrat Hillary Clinton called for authorizing Medicare to negotiate prices. But after Trump won the White House, his focus shifted to the failed Republican drive to repeal the Affordable Care Act. A year went by before the administration reengaged on prescription drugs .
Now, facing the 2020 election, Trump and lawmakers of both parties in Congress have little to show for all their rhetoric about high drug prices. For there to be a deal , enough Democrats and Republicans have to decide they’re better off delivering results instead of election-year talking points.
Q: What are the major plans on the table?
A: On the political left is House Speaker Nancy Pelosi’s plan authorizing Medicare to negotiate prices for the costliest drugs. In the middle is bipartisan legislation from Sens. Chuck Grassley, R-Iowa, and Ron Wyden, D-Ore., to restrain drug price increases. The wild card is Trump. He doesn’t share the traditional Republican aversion to government as price negotiator and keeps complaining that it’s unfair for Americans to pay more than patients in other countries.
There’s significant overlap among the major approaches.
Trump, the Senate bill, and Pelosi would all limit what Medicare enrollees pay annually in prescription copays. That would be a major change benefiting more than 1 million seniors with high costs.
Pelosi and the Senate bill would require drugmakers to pay rebates if they raise their prices to Medicare beyond the inflation rate. Long-available medicines like insulin have seen steep price hikes.
Pelosi and the administration would use lower international prices to determine what Medicare pays for at least some drugs. Pelosi is echoing Trump’s complaint that prices are unfair for Americans.
“If they wanted to do a deal, it’s sitting right there in front of them,” said John Rother, president of the National Coalition on Health Care, an umbrella group representing a cross-section of organizations.
Q: How would any of these plans reduce what I pay for prescription drugs?
A: Under Pelosi’s bill, private purchasers such as health insurers and employer-sponsored plans would be able to get the same price that Medicare negotiates. Medicare would focus on the costliest medications for individual patients and the health care system as whole.
People on Medicare could be the biggest winners. There’s consensus that seniors should get an annual limit on out-of-pocket costs for medications — $2,000 in the Pelosi bill or $3,100 in the Senate bill. Older people are the main consumers of prescription medicines.
Q: What would “Medicare for All” do about drug prices?
A: Under Medicare for All, the government would negotiate prices for prescription drugs.
Whether or not they support Medicare for All, Democratic presidential candidates are calling for Medicare to negotiate prices.
Q: Why are drug prices so much higher in the U.S. than in other countries?
A: It’s not the case for all drugs. U.S. generics are affordable for the most part.
The biggest concern is over cutting-edge brand-name drugs that can effectively manage life-changing diseases, or even cure them. Drugs with a $100,000 cost are not unusual any more. In other countries, governments take a leading role in setting prices.
In the U.S., some government programs such as Medicaid and the veterans’ health system get special discounts. But insurers and pharmacy benefit managers negotiate on behalf of Medicare and private health plans. Federal law protects the makers of a new drug from generic competition, which gives the manufacturer a lot of leverage.
Pharmaceutical companies say high initial prices are justified to recoup the costs of research and development.
However, a major case study — the 2015 Senate investigation of costly breakthrough drugs for hepatitis C infection — found that drugmaker Gilead Sciences priced the medication to maximize profits, not to foster access.
Q: What’s the outlook for drug pricing legislation?
A: Impeachment could suck the air out of the room.
“It is extremely difficult to get things done in that type of environment, and certainly for a president who is largely incapable of compartmentalizing,” said longtime Democratic health care adviser Chris Jennings. “Having said that, the work of policymakers in power must include being responsive to here-and-now domestic problems.”
Trump has pointedly refrained from criticizing Pelosi’s bill even as other Republicans called it “socialist.”
Pelosi’s legislation had its first committee consideration last week, and the leading Democrat on that committee promoted it using Trump-like rhetoric that it’s unfair for Americans to pay more. The bill will get a floor vote, and it could gain political momentum if a pending budget analysis finds big savings.
Democrats would be hard-pressed to drop their demand for Medicare negotiations. But could Trump agree to a more limited form of negotiations than what’s now in Pelosi’s bill? Could he sell that to Senate Republicans?
“It boils down to the crude political calculus of whether in the end this will help my side,” said health economist Joe Antos of the business-oriented American Enterprise Institute. “Will Democrats be able to stomach Donald Trump taking credit for all of this? On the Trump side, it is going to be more of a legacy issue for him.”
Americans need to know more before they can make up their minds about proposed overhauls to the nation’s health care system, according to a survey released Thursday.
When asked if they wanted to wipe out private health insurance for a so-called Medicare for All public insurance program, 40 percent of U.S. adults between the ages of 19 to 64 said they did not know enough to offer an opinion.
A few Democratic presidential candidates have put forward their proposed health care plans, including Medicare for All. Sen. Bernie Sanders, I-Vt. and Sen. Elizabeth Warren, D-Mass. have advocated for Medicare for All models that replace private insurance with a national health insurance plan. And Sen. Kamala Harris, D-Calif., released a health care proposal that covered 330 million Americans under one government health care plan. According to the candidates, these plans would make health care affordable for more Americans. It could help reduce the number of uninsured Americans, which currently amounted to 27.5 million people nationwide in 2018, according to the Census Bureau, marking a rise of 1.9 million people over the previous year.
According to a July 22 poll from the PBS NewsHour, NPR and Marist, 70 percent of U.S. adults said they supported Medicare for All proposals as long as they maintain an option to keep private health insurance. A system like this has been proposed by Pete Buttigieg. By comparison, when asked in a separate question, only 41 percent of survey respondents said they wanted to scrap private health insurance for a government-run plan.
In this latest poll from the Commonwealth Fund, another 32 percent of Americans said they opposed the idea, while 27 percent of Americans favored such a plan, according to the survey results published by the Commonwealth Fund, which researches health policy. The survey polled 4,914 U.S. adults ages 19 to 64 from March 19 to June 9.
“People are confused about what this might mean for them, and what it might mean for the health system and what it might mean in terms of trade-offs,” said Sara Collins, vice president of Health Care Coverage and Access at the Commonwealth Fund, during a call with reporters Wednesday.
Americans are largely satisfied with their health insurance, but lacked confidence that their health care coverage could protect them financially if they fell seriously ill and required medical care.
“These satisfaction rates reflect the fact that most people don’t use their insurance a ton,” said Sabrina Corlette, a research professor and co-founder of the Center on Health Insurance Reforms at Georgetown University. “It’s sporadic interactions.”
Eighty-five percent of working-age Americans said they were satisfied with their health insurance. That included private health insurance, Medicaid, and coverage purchased on the individual marketplace established under the Affordable Care Act. Another 14 percent said they were dissatisfied with their current health insurance.
In contrast, 61 percent of U.S. adults age 16 to 64 said they were confident that they would be able to afford the cost of care if they became seriously ill, while 38 percent of Americans said they were not confident.
These survey results come as Democratic presidential candidates promote their health care plans going into the 2020 election. Meanwhile, Republicans in Congress and the Trump administration have promised to replace the Affordable Care Act, known as Obamacare, with “something better,” although it is unclear what that would be. To date, they have eliminated some policies put into place under Obamacare, including dismantling the individual mandate.
Health care will be one of the most important issues among voters going into the next presidential election. Health care costs for Americans are the highest among industrialized nations. Meanwhile, life expectancy has dropped nationwide in recent years, in part due to the rise in drug overdose deaths, many of which are tied to the opioid crisis. Among developed nations the OECD ranked for infant mortality, the U.S. was among the bottom 11, after Russia.
This survey suggests that all the campaigns have their work cut out for them if they want to ramp up public awareness of proposals on the table to fix health care, Corlette said. She said the public needs more education and discussion about possible solutions aimed at problems in the U.S. health care system.
“It strikes me as a really good opportunity for people on both sides of the debate,” Corlette said. “There’s clearly a lot of people who have just not made up their mind.”
But she said the lack of confidence in how much protection health coverage affords people tugs at the reality that “the system doesn’t work really well for people who are very sick.”
New analysis from the Kaiser Family Foundation supports that notion. Annual family premiums for employer-based health insurance rose 5 percent to $20,576 on average, faster than wage growth, which increased by 3.4 percent, according to the study, published in Health Affairs. And since 2009, those premiums jumped 54 percent.
Health insurance costs and coverage only provide part of the picture of what troubles Americans, said Thomas Miller, a resident fellow with the conservative American Enterprise Institute.
Policymakers need to think about more than tinkering with “incremental expansions of coverage on the margins beyond where we already are,” Miller said. “It’s important to remember that people need most of all economic growth, job security and reasons to be optimistic about managing their lives.”