From CECI CONNOLLY
Equal treatment under the law. A fundamental pillar of American life. Except when it comes to drug producers who benefit from favorable treatment from the federal government.
For too long, prescription drug companies have profited immensely under a system that gives them monopolistic powers to set prices without government or public control.
Even during the pandemic, while a large part of the economy took a hit, the pharmaceutical industry continued to take advantage of the high prices they charged. In fact, 9 of the 10 largest profit margins recorded last summer belonged to pharmaceutical companies.
As the nation’s economy emerges, Big Pharma continues to raise prices and block patients ’access to alternatives at lower costs. It is beyond time to tame once and for all the rising prices of prescription drugs.
For years, healthcare players have been circling concrete actions to really have an impact on drug prices. Efforts to reduce costs for consumers have resulted in higher costs for health plans, resulting in a change in costs rather than a reduction in costs. We, as private, non-profit insurers, believe in ambition and possible innovation in a free market – but the market has failed in this case and it is time for the government to act.
That’s why the Alliance of Community Health Plans (ACHP) puts its support behind reforms that can make a real lasting impact for consumers and for the entire health system. For the first time, a national organization that pays for intensive health care and supports pragmatic and progressive reforms that can truly begin to control the price of prescription drugs.
This includes supporting the dramatic move to give the Secretary of Health and Human Services the power to negotiate lower prices for medicines at the highest price for which there is no competition, in addition to other actions.
A new Kaiser Family Foundation study demonstrates why such a policy is very necessary.
The 250 best-selling drugs, each with one manufacturer and no competitive products on the market, account for 60 percent of Medicare Part D spending. The top 50 best-selling drugs, even with one manufacturer each and no competitors, account for 80 percent. percent of total Medicare Part B expenses. All this equates to increased costs for seniors and taxpayers.
However, price negotiations alone will not solve the multiple problem of exorbitant drug costs.
Policy makers must also address the lack of competition in the biopharmaceutical market by aggressively prosecuting bad actors who use our nation’s intellectual property laws to stifle competition. In what other industry would it be acceptable for big players to block innovative upstarts from coming on the market, even if it meant countless lives could be saved?
The social contract that once governed the trade-offs between the need for innovation and access to affordable medicine is fundamentally broken. A patent system designed to reward innovation has been armed to create insurmountable barriers that hold therapies at lower costs, such as biosimilars, out of the hands of consumers. Authorizing the Federal Trade Commission to resume these efforts will give patients, doctors and health care providers more therapeutic options to choose from that are safe, effective and cost less.
Congress should also demand a report when prices rise rapidly, a sensible concept with broad bipartisan support. In addition, financial sanctions for drug producers are needed to deter the kind of unsustainable price hikes we are seeing year after year, even in the midst of a global pandemic.
Pharmaceutical companies should also be prohibited from shifting costs only to health plans, or from our public insurance programs to private health coverage. This is nothing more than a shell game in the form of consumer financial relief.
Finally, Medicare reforms, including a pocket cap for prescription drugs for the elderly is an important and long-term consumer protection.
Some will say that these reforms amount to an unprecedented intervention by the government in the private healthcare markets. Not so.
For insurers and health care providers, the government not only regulates prices, but also mandates how dollars can be spent.
Health plans, for example, must publicly justify the increase in fees and respect strict federal requirements on how to allocate dollars between health care and administrative costs.
The Affordable Care Act has imposed these requirements on health plans to improve accountability and transparency; to ensure price increases were based on reasonable assumptions and solid evidence. The same rules should apply to drug companies. It’s just so simple.
Suggesting these reforms is not something we take lightly. We believe in the ability of the private sector to innovate and provide valuable coverage and care. Government intervention should not be the first solution. It should be the last resort.
And that’s where we find ourselves when it comes to inexplicably high drug prices. We as a country are desperate for change.
It is time for our elected leaders to intervene where the market has failed and exercise some control over the fugitive cost of prescription drugs. Failure to do so will cost all of us dearly.
Ceci Connolly is the president and CEO of the Alliance of Community Health Plans