Author: Pacific Research Institute

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November 16, 2018 Price and Costs

Health and Human Services Secretary Alex Azar just released a sweeping proposal that would drastically change how Medicare pays for advanced cancer therapies and other potent medicines. The plan relies on foreign price controls to reduce drug spending by $17 billion over five years. Although drug spending may decline, as the Congressional Budget Office has noted, the plan could result in increased healthcare spending elsewhere, as patients will inevitably lose access to medicines. So while the savings is questionable, the negative...

November 9, 2018 Price and Costs

Last month, the Trump administration proposed several reforms to drive down prescription drug prices. One measure would force pharmaceutical companies to mention the sticker prices of their medicines in television advertisements. The new mandate covers all prescriptions drugs reimbursed by Medicare or Medicaid that cost more than $35 a month. The administration hopes this change will empower patients to choose more affordable drugs and embarrass companies into reducing their prices. But the rule won’t achieve those goals. Instead, it would mislead customers into thinking drug prices are...

November 4, 2018 Innovation

Seasonal outbreaks of the flu cause thousands of deaths even in a good year, and the last flu season, 2017-2018, was a terrible one. It killed 80,000 Americans and sent 900,000 to the hospital, making it the worst influenza season in decades. Data from the Centers for Disease Control and Prevention (CDC), show how much of an outlier it was: Previously, seasonal outbreaks since 2010, had killed between 12,000 and 56,000 and caused between 140,000 and 710,000 hospitalizations. Statistics like that can seem impersonal,...

October 29, 2018 Policy Proposals

Bringing a new drug to market now takes, on average, $2.6 billion and more than 10 years. Those numbers could shrink, and countless patients could benefit, if Food and Drug Administration regulators were less risk-averse. I know that from firsthand experience. Oct. 30 marks the 36th anniversary of the FDA's approval of human insulin synthesized in genetically engineered bacteria, the first product made with "gene splicing" techniques. As the head of the FDA's evaluation team, I had a front-row seat. Although...

October 24, 2018 Policy Proposals

Rarely is there bipartisan agreement that a tax cut won’t cost the federal government money. But, in the case of the medical device tax (a 2.3 percent tax on medical devices and products that was passed as part of the Affordable Care Act) this is true by definition because the tax is already suspended. The tax applies to medical devices such as pacemakers, advanced imaging technology (Cat Scan, MRI and ultrasound equipment), artificial joints, surgical gloves, and dental instruments. Devices that...

October 23, 2018 Price and Costs

This month, the Trump administration proposed a new rule that would require advertisements for prescription drugs covered by Medicare or Medicaid to include the list price of the medicine. To be sure, a free market is dependent on consumers making informed decisions. But this move would provide patients with incomplete, misleading numbers that would muddle their healthcare decisions. Patients almost never pay the full list price for their medication. After a drug is manufactured by a pharmaceutical company, its price and distribution are influenced by...

October 18, 2018 Policy Proposals, Studies

The controversial medical device tax hurts doctors, patients and manufacturers and should be repealed by Congress. The medical device tax imposes a 2.3 percent tax on such common items as pacemakers, CT scan machines, dental instruments, and artificial joints. It is currently suspended. Congress isn’t even collecting the revenue it anticipated, and it has also led to lower investment in research and development in new medical technology....

October 17, 2018 Price and Costs

The largest problems in the health care industry are often created by reformers envisioning themselves as free market saviors, when in reality they are merely advocates for more intrusive government regulations. The Trump administration’s proposal to require that drug advertisements include the medicine’s list price is such an example. On its face, requiring price disclosure appears to promote transparency and free markets. Why shouldn’t consumers know the price of a good before they purchase it? Of course, consumers should. The problem is that,...

October 1, 2018 Policy Proposals

Although best-known for its peace-keeping in areas of conflict — where it enjoys a mixed record, at best — the U.N.'s agencies, programs, commissions and international agreements have a dismal record of accomplishment, especially while acting as the world's regulator-wannabe for all manner of products, processes and activities. The U.N. regularly panders to activists and, not coincidentally, adopts policies that expand its own scope and responsibilities. Science and free market principles routinely get short shrift. U.N. programs and projects inevitably become...

September 4, 2018 Price and Costs

How can you tell if competition is working in a given market? Generally speaking, prices go down while quality goes up. Productivity increases as more efficient methods are discovered. Shortages are rare to nonexistent. And, most important, consumers win. Government intervention, monopolies, and other market distortions can disrupt the normal rules of supply and demand, fostering competition that's actually pernicious to consumers. These distortions are now a major problem in healthcare. With respect to medicines, the problem is that "everybody wins when list...

August 16, 2018 Price and Costs

Pfizer CEO Ian Read recently told investors that he believes pharmaceuticals will soon be sold without rebates. While this change, if it comes to pass, is undoubtedly positive for patients, a question naturally arises: why? After all, rebates and discounts are a normal part of most competitive markets. The problem is that a healthy competitive process does not currently exist in the pharmaceutical market because the current market structure does not effectively account for the interests of patients, who are the...

August 7, 2018 Price and Costs

Through its purchases of durable medical equipment (DME), the Centers for Medicare & Medicaid Services’ (CMS) helps many patients remain in their home and out of hospitals or other long-term care settings. These purchases cover a wide array of medical equipment including diabetes testing strips, wheelchairs, and oxygen tanks. Previously, CMS maintained a set fee schedule to compensate medical equipment suppliers, but this system was widely panned. The critics, including the General Accounting Office (GAO) and the Inspector General of the...

June 5, 2018 Price and Costs

In 2017, there were 46 new novel drug innovations, including new treatments for cancers, Parkinson’s disease, and serious skin infections. These innovations are essential for improving the quality of health care in the U.S. However, innovation is not sufficient. It is equally imperative to promote drug affordability through greater competition. Promoting both innovation and competition requires a careful balance. Thanks to the Hatch-Waxman Act of 1984, the incentives for chemically-based medicines reasonably promote both pharmaceutical innovation and a competitive drug market. Due to...

June 5, 2018 Price and Costs, Studies

By removing barriers holding back the increased use of biosimilars, savings could be significant. In a case study of infliximab, used to treat rheumatoid arthritis, Crohn’s disease, and other illnesses, reforms could realize an annual savings of between $412 million and $465 million....

May 22, 2018 Price and Costs

Massachusetts may soon stop paying for some of the lifesaving medicines its poorest residents count on. State officials recently requested permission from the federal government to restructure MassHealth, the state's Medicaid program. If their waiver is approved, a small group of state bureaucrats will determine which drugs are off limits to the state's 1.9 million Medicaid beneficiaries. Many foreign countries tightly restrict which medications patients can take. Such rationing often proves fatal. Importing this system to Massachusetts would be a callous mistake. The...

May 17, 2018 Price and Costs

Due to its national implications, last week’s introduction of the Department of Health and Human Services’ (HHS) blueprint on drug prices is garnering all the attention. Despite its importance, HHS’ blueprint should not overshadow the many poor, and even unconstitutional, policy proposals that are occurring at the state level. For example, Maryland passed a drug-price-gouging law in 2017 that empowered the Attorney General (AG) to take legal action against generic drug companies if the AG judged these price increases to be...

May 17, 2018 Policy Proposals

Last Friday, President Trump delivered a major speech from the White House Rose Garden on prescription drug prices. He announced several policies aimed at reducing the overall cost of pharmaceuticals and limiting patients’ out-of-pocket expenses. His reform agenda, entitled “American Patients First,” is largely excellent. It mostly harnesses the power of free-market competition, rather than government price controls, to drive down costs for patients while continuing to incentivize drug manufacturers to invest in innovative, lifesaving research. Contrary to popular belief, drug spending...

May 8, 2018 Policy Proposals

Health care is becoming less affordable every year. Over the past 10 years, national healthcare expenditures have grown 45 percent, but our economy has grown only 28 percent. This isn’t sustainable; and, solving this problem should be a top policy priority. However, “rounding up the usual suspects,” as Captain Renault might suggest, will not make U.S. health care system more affordable. One of the usual suspects is drug costs. Polling shows the American public blames pharmaceutical companies for high healthcare prices, perhaps...

May 4, 2018 Price and Costs

A U.S. district court in Montana just imposed a $34 million fine on Canada Drugs, an online pharmacy charged with selling counterfeit medications to unsuspecting Americans. Some of the drugs contained no active ingredients. Canada Drugs isn’t the only online pharmacy that puts patients’ lives in serious jeopardy. The National Association of Boards of Pharmacy recently examined more than 11,000 online pharmacies and found that 96 percent were operating illegally. Many of these sites claim to be Canadian. But they often have no...