Patients are complaining their drugs are unaffordable. Insurers are protesting that specialty drug costs are forcing them to jack up premiums. State Medicaid directors say spiking pharmacy costs are forcing them to make painful coverage trade-offs.
Congress has been grilling drug company executives over their big price hikes. Democratic presidential nominee Hillary Clinton has proposed unprecedented federal review of price hikes. Both Clinton and GOP nominee Donald Trump favor letting consumers buy cheaper drugs from foreign countries. Both also have said Medicare should negotiate prices with drugmakers, though Trump's campaign website doesn't mention this.
But despite the growing political furor, the odds of significant federal action on drug costs this year or next are slim, experts say.
That may surprise voters, given the torrents of rhetoric and promises from politicians. Yet the issue of how to make drugs more affordable for individual patients and society is so complex and sensitive—and drug industry opposition so formidable—that a comprehensive, politically viable approach to solving the problem has yet to emerge.
The impasse has left patients, insurers and healthcare provider groups pushing for immediate relief from the most egregious price spikes, like Mylan's 550% list price increases over eight years on EpiPen epinephrine auto-injectors, a must-have product for counteracting allergic reactions.
Some are hoping the EpiPen brouhaha will mark a tipping point in the debate. “This affects families and children, and it's a potentially life-threatening situation,” said John Rother, CEO of the National Coalition on Health Care and head of the Campaign for Sustainable Rx Pricing, a broad coalition of groups advocating market-based approaches to curbing drug costs. “It's a simpler problem to understand than the issues raised by other drugs.”
Public opinion clearly backs quick action. A Kaiser Family Foundation survey last month found 77% of Americans say prescription drug costs are unreasonable, with 82% backing giving Medicare the power to negotiate drug prices.
And the mounting public pressure has produced some results. One drugmaker, Allergan, recently promised to voluntarily limit price hikes on its products to once a year and keep them to single-digit percentage increases.
But those are the exceptions—not the rule. Other drug companies are shifting the blame to insurers, arguing that health plans are pushing excessive costs on members through high deductibles and copayments.
Making policy action tricky is that rising prices for generic, brand-name and biologic products each have different causes, and each requires a different set of policies to bring under control. And each category has its own set of stakeholders ready to thwart decisive action that would bring down prices.
With brand-name drugs, many stakeholders have bought into the idea that lower prices will reduce the financial incentives for developing new breakthrough products. With biologics, patient and physician groups worry that potentially cheaper biosimilars may not have the same efficacy as the brand-name biologics they replace.
There has been a greater willingness to target profiteering on generic and older branded products, where triple-digit price increases seem absurd on their face. But rising prices for generics have been triggered by a variety of factors, including a shortage of producers for harder-to-manufacture injectables. That leaves the remaining manufacturers with hard-to-counter market power.
Ideology also gets in the way. Even after the election, it is unlikely Republicans and Democrats will reach an agreement on drug-cost legislation. That's particularly true for Democratic plans to give Medicare the power to negotiate prices for the Part D drug benefit program. There's at best an outside chance they could come together on narrow measures to enhance competition in the generic market.
The powerful drug industry traditionally has been able to fend off government efforts to counter price hikes. It successfully lobbied Congress in 2003 to bar Medicare from negotiating prices in the new Part D program. The industry has been aided by opposition from physician and patient advocacy groups, who fear that cost-benefit calculations will be used to cut them off from high-priced but effective medicines.
Indeed, fierce criticism from doctors and patients has the CMS taking a second look at its recent proposed rule to reduce Medicare Part B payments to doctors who administer expensive drugs in their offices, the most common mode for cancer chemotherapy drugs. Shifting to a lower mark-up and a higher facility fee was seen as a way to nudge them to use cheaper, equally effective alternatives.
“Prospects for legislative change are not high and are probably a little ways off,” said Dr. Aaron Kesselheim of Harvard Medical School, who co-authored a recent JAMA article surveying various reform proposals. “But maybe things are starting to change in a way that might provide an opening for some reform.”
“It's hitting the point where the drug cost issue has got everyone's attention, but I'm not sure what the coalition would be that would support heavy-handed government intervention,” said Chip Kahn, CEO of the Federation of American Hospitals, which is participating in the Campaign for Sustainable Rx Pricing.
Outside the legislative arena, there is growing support for the idea that drug prices should be based on the value they provide for patients. A few private insurers and drug companies are experimenting with outcomes-based arrangements.