Price and Costs

On this page, you’ll find the Center’s research on the complex world of pharmaceutical pricing. Our focus will be breaking down current pharmaceutical pricing structures and processes and potential reforms to improve efficiency and innovation; evaluating the impact of regulatory-created inefficiencies such as Pharmacy Benefit Managers (PBMs) and the 340B program; and analyzing how policy proposals such as price controls and drug importation would undermine competition.

Last week, a House subcommittee held a hearing on pharmacy benefit managers and their impact on the prices patients pay for prescription drugs.The hearing speaks to voters' concerns. Republicans and Democrats alike have identified the cost of prescription drugs as their No. 2 health care concern, according to polling this month from KFF.And PBMs deserve congressional scrutiny. These middlemen have used their enormous influence in the drug market to make prescription medications unaffordable for a sizable share of patients. Read the...

In a patently politicized press release, Senator Bernie Sanders (I-VT) who is  Chairman of the Senate Health, Education, Labor, and Pensions (HELP) Committee, claims that the U.S. price of Ozempic is too high. As evidence, he cites generic companies that claim they can sell Ozempic for less than $100 a month, an inherently flawed JAMA study that claims that these same diabetes drugs can be profitably produced for less than $5 a month, and inaccurate price comparisons with other countries. Debunking...

It's easier to have a car or refrigerator shipped to your home these days than a prescription. To get even the most common prescription drug still requires a visit to the doctor, a trip to the pharmacy, and a convoluted series of negotiations between insurers, middlemen, and pharmaceutical companies. Fortunately, that's starting to change. In recent months, drug companies Pfizer and Eli Lilly have begun rolling out direct-to-consumer programs that let patients purchase basic prescriptions remotely. Read the full article at Forbes...

The Inflation Reduction Act (IRA) effectively imposed price controls on a portion of the pharmaceutical market. Worse, by design, the reach of these price controls will expand every year. The intended consequence of the policy is to reduce overall spending on drugs, but all regulations have unintended consequences, too. While these consequences may be unintended, they need not be unexpected. In the case of the IRA, these unintended impacts now threaten to undermine the entire purpose of the policy. Read the full...

Medicare this month announced the end of its first round of "negotiations" over the prices of 10 prescription drugs covered under the Part D benefit as authorized by the Inflation Reduction Act. The results the Biden administration has delivered are a lot less dramatic than they're letting on. According to the White House, the program will save the federal government an estimated $6 billion in 2026, the first year the new prices will be in effect, while reducing costs for seniors...

Dozens of state and local governments are suing drug companies and pharmacy benefit managers, alleging that they're unfairly hiking the price of insulin. The plaintiffs say they're fighting for patients. They're less forthcoming about the fact that they've profited handsomely from the system they're now decrying. For years, these cities and states have insisted on a cut—if not all—of the rebates that these pharmacy benefit managers extract from drug makers when negotiating over whether and how to cover specific drugs.  ...

The federal government has announced the long-awaited results from the 2022 Inflation Reduction Act’s (IRA) drug price negotiations.[1] The Biden Administration has been crowing that they have achieved “a historic moment that will help lower prescription drug prices for millions of people across America.” Nothing could be further from the truth. The Biden Administration has sold out patients and the hope for future cures to achieve results that pale in comparison to the benefits enabled by efficient market competition. According to...

Any day now, the Biden administration will publish the prices it has set for ten drugs covered by Medicare's Part D prescription drug benefit. These price controls will provide "meaningful financial relief for millions of people with Medicare," administration officials say. Many seniors are about to see just how false that promise is. Millions of beneficiaries won't see a nickel in relief at the pharmacy counter. In fact, their costs will go up. Click to read the full article in Forbes. ...

By Anthony M. DiGiorgio, DO, MHA and Wayne Winegarden, PhD Enacted by the US Congress in 1992 to help entities serving lower-income and uninsured patients stretch their resources, the 340B Drug Pricing Program mandated drug companies give large discounts to covered entities (CEs). Judging the program on its outcomes, not its intentions, there is growing evidence that the 340B program fails to achieve its primary goal. Giving discounts to entities, rather than to patients, primarily shifts resources from payers and drug companies to...

Earlier this month, the U.S. Food and Drug Administration approved donanemab, a novel treatment for Alzheimer's disease that Eli Lilly will sell under the brand name Kisunla. The drug targets amyloid, a type of protein that builds up in the brains of people with the disease. It was shown to slow the progression of Alzheimer's by 35% over 18 months compared to a placebo. Donanemab's approval comes about a year after the agency gave the green light to lecanemab, another monoclonal antibody proven to slow...

House lawmakers recently introduced legislation that would at last repair a program meant to provide low-income Americans with affordable medicine. In theory, the federal 340B Program, named after the section of the 1992 law establishing it, allows hospitals serving underprivileged groups to buy medications at steep discounts. The idea was to improve access to drugs in areas where price was a barrier. The problem is that the law has a loophole big enough to drive an ambulance through. Hospitals have exploited it,...

The Biden administration proposed a rule this month that would remove medical debt from credit reports. It's sure to be popular, if for no other reason than that it's expected to boost credit scores for the more than 15 million people with such debt by an average of 20 points. But as with so many of President Joe Biden's signature health reforms, his latest ploy fails even the most basic cost-benefit analysis. Implicit in the proposal are two assumptions. Click to read the...

There's never been a better time to get lung cancer in the United States. That may sound morbid. But this deadliest of cancers appears to be losing a bit of its punch. The combination of smoking reduction, increased screening, and pharmaceutical advancements has caused the lung cancer death rate to drop 20% over the past five years, according to reporting from the Wall Street Journal earlier this month. The last leg of that three-legged stool is the most impressive. The Journal highlighted a suite of new treatments...

Earlier this year, European authorities recommended approval of tofersen, a new drug that treats a rare genetic form of amyotrophic lateral sclerosis, or ALS. That decision came nearly a year after American regulators granted the drug accelerated approval. Patients with that rare form of ALS in England aren't so lucky. The National Institute for Health and Care Excellence, or NICE, which evaluates whether treatments are "cost-effective" for the country's National Health Service, announced a decision in March that would effectively render the drug unavailable to them. It's a...

Last month at a White House event, President Joe Biden and Sen. Bernie Sanders, I-Vt., took a victory lap for supposedly having "beat Big Pharma" through drug-pricing provisions in the Inflation Reduction Act. Beaming with pride, they hailed new powers for Medicare to "negotiate" drug prices as a historic achievement. But their self-congratulation rests on a false premise. Far from being a big win for Americans' health, the IRA bankrolls billions of dollars' worth of left-wing policy priorities at the expense of life-saving pharmaceutical innovation...

Speaking at a White House event with Sen. Bernie Sanders, I-Vt., very recently, President Biden crowed about his rapidly progressing scheme to impose price controls on prescription drugs. "Finally — finally we beat Big Pharma," he said to Sanders. Unfortunately for Americans — and indeed, patients everywhere — the Democrats' assault on the drug industry will result in fewer cures, less access to state-of-the-art medicines, and more avoidable death and suffering. Democrats gave the federal government the ability to dictate the prices of prescription drugs through Medicare...

Barber et al. just published a fundamentally flawed study on diabetes medicines in JAMA Network Open (JNO). This study wrongly suggests that cost-based pricing accurately values innovative on-patent medicines, distracts from serious policymaking, and fuels political grandstanding by politicians such as Senator Bernie Sanders. Cost-based pricing could be an economically viable pricing strategy for generic drugs. Mark Cuban’s Cost Plus Drugs (CPD), launched in 2022, is attempting to disrupt the generics industry using this pricing model. CPD sells generic medicines directly to consumers...

Like most pharmaceutical companies, Gilead Sciences Inc. devotes a huge amount of time and money to making sure its products are safe for patients. The U.S. Food and Drug Administration approved its drugs to fight HIV, and these medications have worked remarkably well. It then developed the next generation of HIV medications, and those too have worked well. For that, Gilead is being rewarded with lawsuits—lots of them. Earlier this year, California's First District Court of Appeal ruled that lawsuits brought by...