According to a 2021 RAND Corp. study, drug prices on average in the U.S. are 2.5 times those paid by 32 other nations in the Organisation for Economic Co-Operation and Development.
What’s the best approach to balancing incentives for pharma research and development with the drug affordability challenges we’ve had for decades?
Dan Jones: I’ll throw the question back at you. At what level are they making R&D investments? We support innovation and market forces. We want to see new drugs to help cure diseases and illnesses. But the pricing aspect to some of the drugs that come to market in many respects is untethered and unjustified and the efficacy is questionable. And there’s just no transparency.
Lori Reilly: If you look out over the past decade, prices for prescription drugs have been at or below the rate of inflation. In 2020, net prices were a negative growth rate. That’s in part because of the competition we have in our system. Nearly 90% of all prescriptions are generic. So we have, in our opinion, a system that’s by and large working.
What are some steps insurers and health plans can take to reduce members’ drug costs?
Jones: In many ways, the health plan role is within a market that works, where we can negotiate good drug prices, where we’ve entered value-based arrangements. But we’re reminded how many ways the market has failed, whether it’s anti-competitive type practices by some drugmakers manipulating the market, keeping competition at bay, or hiking prices of old drugs without much justification.
Reilly: One place to start is the rebate system. If you look at the list price of a branded medication, about half the total price goes to someone other than the manufacturer. It’s going to the pharmacy benefit manager, the insurer and other pieces of the supply chain, maybe hospitals and others. You can make a big dent in lowering what patients pay by reforming the rebate system.
Where does your organization stand on giving authority to HHS/Medicare to negotiate with drugmakers on drugs that don’t have any competition?
Jones: We’ve laid out a set of reforms we believe need to be addressed together. The (HHS) secretarial negotiation is a piece of it. What has drawn a lot of support is reforming the Part D benefit in a way to create an out-of-pocket cap for catastrophic costs. … Drugs with prices that are rising faster than the rate of inflation also should be addressed.
Reilly: That’s an issue that has come up many times since passage of the Medicare Part D benefit. What people maybe fail to appreciate regarding Part D is there’s already negotiation occurring. … I think what the question actually means is do we want the government to insert itself and make a decision about what choice and access to medicines a patient may get.