To help rein in the rising costs of prescription drugs, the next administration should improve the market for generic medicines and find ways to incorporate drugs into the movement toward value-based payments, a panel of policy experts gathered by the Kaiser Family Foundation said Wednesday.
Recent incidents such as spiking costs for life-saving drugs like the EpiPen have triggered congressional hearings and public furor. The panel endorsed policies that have been pushed by both Republicans and Democrats, although experts say solutions will be difficult to implement because the market is complex and the pharmaceutical lobby highly influential.
Presidential nominees Hillary Clinton and Donald Trump have both railed against high prescription costs on the campaign trail. Clinton has suggested capping out-of-pocket costs and establishing an agency to review outlier price increases. Trump has offered few details about how he would work to lower costs.
A recent Kaiser survey found that more than three-quarters of Americans say prescription drug costs are unreasonable.
Gerard Anderson, a professor at the Johns Hopkins Bloomberg School of Public Health, said he believes Medicare should be able to negotiate some prices, such as drugs expensive enough to qualify for catastrophic coverage. Clinton and Trump have both advocated for allowing Medicare to negotiate prices, but it is unlikely a Trump administration would actually pursue such a policy since it has not generally been supported by Republican Party leaders.
Dana Goldman, of the USC Schaeffer Center for Health Policy and Economics, said the main problem with the market for generic drugs is that there is not always enough competition. He advocates regulating the market, possibly with expedited review for competitors and selected cases of importation from other countries. Unlike brand-name drugs, generics aren't protected by patents. Competition then drives down the cost, but sometimes only at first.
“We want to make sure there's a safe and reliable supply for generics, but we also want to make sure we're not in a situation where prices drop so low no one wants to make it,” he said.
Trump and Clinton have also both embraced importing drugs to get lower prices. Anderson warned that such a policy should be implemented narrowly, at least at first, because of the need to ensure reputable suppliers. He also said it is not clear that very many countries would be able to offer lower prices because of differences in their healthcare payment systems.
Jennifer Bryant, senior vice president for policy and research at the trade group Pharmaceutical Research and Manufacturers of America, said drugs are being left behind in the growing movement toward value-based payments and should be included in programs like bundles that aim to improve quality while reducing costs.
“Medicine should be a piece of that, but the ability to develop those relationships has been slowed down,” she said.
Goldman said talk about high per unit drug prices obscures the real issue, which is access to treatment. Policies should reflect the needs of future Americans and promote innovation and the creation of more treatments while also ensuring access for those in need now.
He suggested that payers should create performance contracts with manufacturers that reimburse them based on data such as rates of infection and that spread out payments over many years.
“We don't reward the really innovative stuff and we don't penalize enough the stuff that has marginal benefit. And that's a pricing issue,” he said.
Goldman said transparency about drug prices would be helpful, but the research and development costs don't matter nearly as much as the value of a drug.
Anderson, however, said that if manufacturers point to research and development costs as a driver of high prices, they should be willing to disclose information about those costs.
“We've got to have much more transparency,” he said. “A drug is something that everybody needs. It's something that should have a single price to it.”