The Trump administration’s recently issued “Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs” fails to address the root cause of high cost prescription drugs: pharmaceutical company profiteering on backs of consumers and taxpayers. The Blueprint lists broad policy objectives the administration may pursue to lower drug costs – like increased competition, better negotiation, incentives for lower list prices, and lower out-of-pocket costs. Rather than advancing solutions, Trump’s plan provides vague proposals and self-laudatory statements. National Health Law Program’s (NHeLP) comments filed in regards to Trump’s Blueprint counter the administration’s meandering, misguided approach, and proposes tangible solutions that the Blueprint overlooks completely or addresses only in part.
In the Blueprint, the administration expresses renewed interest in “closed formulary” proposals for Medicaid, which would allow states to severely limit patient access to the medications they need. But, as explained in NHeLP’s comments and this earlier blog post, allowing states to cut costs by limiting prescription drug access for people on Medicaid does not address the problem of high drug pricing.
Pharmaceutical companies can charge whatever price they think the market will bear due to monopolies created by the drug approval and patenting system. For example, the Senate Finance Committee issued a bipartisan report in 2015 documenting how the price of Sovaldi, a cure for hepatitis C, was set at $1,000 per pill, totaling $84,000 for a treatment regimen. The committee found that this price has no correlation to the drug’s research, development, and production costs. NHeLP and other advocates are pushing for greater transparency on the actual costs of research and development to help curb pharmaceutical companies from setting exorbitant prices when launching a new drug.
Another promising, yet underutilized strategy to lower drug prices is the federal government’s authority to use patents without permission of the patent owner. Federal officials threatened use of this authority during the 2001 anthrax scare, which led the manufacturer to offer an antibiotic at greatly reduced prices. In most cases, federal authority to break drug patents should be confined to situations where a patent holder hinders the availability of generics and there is an overriding public interest to make a medication more available. One such example is Truvada, a medication used in the treatment of HIV, which is the only drug approved for pre-exposure prophylaxis (PrEP) to prevent HIV infection. However, PrEP is not widely used, largely because of its cost. Advocates estimate it costs less than $6 to make a 30-day supply of Truvada. Yet its manufacturer, Gilead, charges more than $1,600 for the same amount – a price inflation of more than 25,000 percent. Given the health costs for treating persons living with HIV and AIDS, the urgency of making PrEP more broadly available could not be greater. Moreover, using federal authority to reduce Truvada pricing would send a strong message to the pharmaceutical industry and help deter price gouging.
While the HHS Blueprint claims to address high out-of-pocket expenses for consumers, it says little about cost sharing in private health plans. Research shows that when consumers pay high copays, coinsurance, or deductibles to access needed health care services like prescription drugs, they often go without needed care. NHeLP’s comments urge the administration to support lowering the cap on annual cost sharing established by the Affordable Care Act and reinstate the cost-sharing subsidy payments that the administration stopped paying in October 2017.
NHeLP also recommends the administration act against the increasing use of co-insurance, whereby insurers charge consumers a percentage of the drug’s cost instead of a flat co-pay. Co-insurance disproportionately affects persons with serious or chronic medical conditions who may need multiple or costly medications, and allows insurers to shift the financial burden of needed care onto consumers.
Ultimately, the Trump administration’s proposals fall far short of what is necessary to truly lower prescription drug costs. NHeLP and other health advocates will keep pushing this administration to take concrete steps to reduce the cost of prescription drugs without limiting access for consumers, to support efforts to lower out-of-pocket expenditures for health services and benefits, including prescription drugs, and to stop sabotaging the ACA, which leads to increased health care costs for everyone.