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Three Issues That Plague the Drug Pricing System — and the Evidence That Can Shape Solutions

Congress must act aggressively to provide patients with relief at the pharmacy counter and lower drug spending, which is draining government, employer, and household budgets.

With exorbitant prescription drug spending draining government, employer, and household budgets, Congressional action is needed to make drugs accessible and affordable. (Joe Raedle/Getty Images)

Americans are fed up with the high cost of their prescription drugs. Recent polling showed that over 80 percent of voters feel like the prices charged for prescription drugs are unreasonable. Of the surveyed registered voters, more than half, 53 percent, identify the cost of health care as a top issue Congress and the president should address. This shouldn’t be surprising considering the prices of drugs in the U.S. are double that of 19 other advanced, industrialized nations.

Aggressive Congressional action is needed to make drugs accessible to all and address the exorbitant prescription drug spending that’s draining government, employer, and household budgets. (The total spending on prescription drugs in 2017 totaled over $480 billion, according to Altarum).

Understanding the evidence behind the soaring costs of prescription drugs is crucial to the implementation of actionable solutions. Below are a series of policy briefs that define key problems in our drug pricing system and the evidence that informs our proposed solutions, which we believe must be comprehensive and address three key issues:

#1 Patent abuses and anticompetitive behaviors that extend government-granted monopolies and reduce competition.

    REMS Abuse and the CREATES Act: The CREATES Act would address REMS abuse by creating a legal pathway for generic manufacturers to sue brand sponsors for not providing product samples.

    Pay-for-Delay: Policy solutions must address both generics and biosimilars and contemplate newer generations of pay for delay” settlements that may not involve direct payments.

    #2 Market distortions like rebates and co-pay coupons that can incentivize the use of higher cost therapies.

    Sunshine Act: Reforms to the Sunshine Act are needed to shed light on payments made to patient groups and free drug samples, both of which increase spending on high-priced drugs.

    Medicare Part D: The structure of Medicare Part D, and the problematic incentives it creates, call for actionable solutions to provide relief to patients and taxpayers.

    #3 High launch prices and unjustified price increases which are difficult to control and put increasing pressure on patients and finances.

    Medicare Part B: A number of payment reforms could encourage the use of the most clinically appropriate product, regardless of price, or the use of lower-cost alternatives.

    Medicaid: Despite the success of the Medicaid drug rebate program, it is clear that more needs to be done to lower the prices states pay for drugs.

    Medicaid by Arnold Ventures on Scribd

    Medicare Part D: An inflation penalty imposed on pharmaceutical manufacturers could limit price increases and generate the program sizable savings that could be used to lower beneficiary out-of-pocket costs.