Pharmaceuticals Price: What can we do about it
High pharmaceutical prices in United States are a byproduct of a complex interplay of factors including, institutional peculiarities of health care system (payor-provider mechanisms), lack of government regulation of prescription drug prices, high cost of research and development, international price control regime, the inherent profit imperative of the corporate pharmaceutical sector and its lobbying ability in political circles. There are no simple solutions to this vexed issue and dealing with it requires a multifaceted approach including, at policy, institutional, legislative and regulatory levels. Some of the steps required are mentioned below:
- Negotiation for discounts on prescription drugs: As is the practice in other developed nations, the federal government Department of Health and Human Services should have the leverage to negotiate lower prescription drug prices for Medicare. In most developed countries, the drug prices are on average lower than U.S. prices by 50-70%.
- Reforms in the patent regimes: Policies and measures to allow easy market entry of generic drugs and curtailment of the amount of time allowed for brand name drug makers to market biologic drugs without competition from generic drug makers. Promotion of FDA-approved generic drugs and increasing awareness of costs-savings accruing from generic drug use, is another way to curb expenditures.
- In case of drugs that lack competition, there is no pressure on drug manufacturers to lower prices. This often results in an unchallenged incremental escalation of prices over successive years. Strategically encouraging the entry of marginally different drugs with similar therapeutic indications and efficacy is a pragmatic way to counter price rise. Moreover, the impetus of pharmaceutical research and development is more on potentially lucrative products (e.g., biologics). The Affordable Care Act has greatly facilitated the development of shortened licensure provisions for biosimilar drugs. Early finalization of these standards (which is still pending) will help determine conditions under which a biosimilar can be allowed to replace an already approved biologic. Biologics account for almost half of US drug spending and therefore, this step could yield much relief on drug spending and facilitate cost cutting in the long run.
- Reimportation of U.S. manufactured drugs from countries with cheaper prices and use of internet pharmacies have been suggested as a possible measure. However, the existence of several legislative, ethical, regulatory and economic pitfalls means that this can at best be a temporary approach.
- Integrating the benefits of medical and pharmacy benefits: Specialty drugs are often paid under the medical benefit rather than the pharmacy benefit. This has implications for traditional cost-sharing mechanisms since blurring of boundaries between prescribing patterns and utilization patterns across the two may result in incongruity between utilization management techniques that are employed for specialty and traditional drugs.
- Exploring alternative payment and incentive structures, e.g., coverage with evidence development in case of new therapeutic modalities. Such payment strategies can ensure access to new drugs while generating additional evidence on the value to patients of these new medications.
- The pharmaceutical industry wields considerable influence on U.S. Congress and makes substantial contributions for political campaigns. Reigning in this influence is an obvious step that could help lower drug prices in the medium term.
