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.

Biosimilars have the potential to realize billions in savings for the health care system if reforms are enacted to incent their market share to grow, according to a new issue brief issued today by the Center for Medical Economics and Innovation at the California-based, free-market think tank, the Pacific Research Institute. “Biosimilars are innovative medications that can treat patients at lower costs,” said Dr. Wayne Winegarden, director of PRI’s Center for Medical Economics and Innovation and author of the issue brief. ...

Determining whether the prices for medicines are appropriate or not is critically important, which is why studies that attempt to answer this question must stand up to scrutiny. Studies that undervalue medicines jeopardize the development of future cures, while studies that overvalue medicines justify the imposition of excessive health care costs today. Judged against this goal, a recent World Health Organization (WHO) technical report is disappointing. In this report the WHO claims that the industry’s current pricing approach “makes cancer medicines...

A new poll from the California-based nonpartisan think tank, the Pacific Research Institute (PRI), shows that Americans overwhelmingly support innovative gene therapies, which change the focus of medicine from treating illnesses to curing illnesses. Click here to read the top-line results of PRI’s poll on gene therapies “Gene therapies have the potential to cure a wide array of difficult-to-treat diseases, including Alzheimer’s Disease, autism, cystic fibrosis, HIV, and cancer, among others” said Dr. Wayne Winegarden, director of PRI’s Center for Medical Economics...

The Trump administration is planning to propose one of the biggest changes to Medicare in decades. The draft rule aims to reduce government spending by linking Medicare drug reimbursement rates to the rates in more than a dozen other Western countries that use price controls to hold down pharmaceutical spending. If implemented, the rule would effectively bring socialist drug price controls to the United States. Though the government would save some money in the short term, the change would threaten patients’ health and...

The Senate Health, Education, Labor & Pensions (HELP) Committee has just released a bi-partisan bill authored by Senators Lamar Alexander (R-TN) and Patty Murray (D-WA) that would make health care more affordable and more transparent for patients. These reforms are not grandiose fantasies that are destined to fail, such as “Medicare for All”. Instead, the bill proposes modest “common sense” reforms that target specific inefficiencies and disincentives that plague the current health care system. For starters, the bill would promote greater...

The wrong model, no matter how hard you work it, will never provide the right answer. When it comes to how we pay for health care, the U.S. is using the wrong model. What’s worse, these financing inadequacies could threaten the viability of new therapies that will bring hope to patients who formerly had none. The well-being, and sometimes the lives of patients, depend on getting the health care financing model correct. New gene therapies will transform the treatment of devastating diseases. For...

Why People with Diabetes Drive for Hours to Buy Insulin in Canada By Christopher Curley For Lija Greenseid, the math was simple. Drive a few hours to pay $56 for a box of Humalog insulin pens for her young daughter with type 1 diabetes or pay as much as $230 at home. The decision, in fact, was a no-brainer for Greenseid and a group of diabetes advocates and patients who made the trek from Minnesota to Canada to buy insulin in early May. That trip...

Sometimes the important reforms are those that address the mundane details. The Administration’s proposed changes to how pharmaceutical rebates are paid fall into this category. While far from a panacea, this reform could meaningfully improve the pharmaceutical market. For this reason, the Congressional Budget Office’s (CBO) just released “budget score“ on the proposal is disconcerting. A budget score from the CBO estimates the impact of policy changes on the federal budget. In this case, the CBO estimates that between 2020 and 2029 the...

The costs of medicines continue to dominate the headlines, attracting the attention of Congress and the Trump Administration. Reforms are necessary, but many of the reforms under consideration will make the situation worse. Indexing U.S. prices to the prices in other countries that use price controls, or using third-party arbitration to set the price of prescription drugs, exemplify these wrong-headed policies. The Trump Administration’s proposal would set Medicare Part B prices (prices for drugs administered in a clinical setting) to the...

Senator Rick Scott (R-FL) has just doubled down on one of the Trump Administration’s unsound ideas. His proposal is disappointing for many reasons, particularly because Alex Azar, Secretary of Health and Human Services, has proposed an alternative reform that, if Congress implemented, would meaningfully improve the affordability of prescription drugs for patients. As part of the “Transparent Drug Pricing Act of 2019”, Senator Scott proposes to set the list price of all medicines to the lowest retail list price among five...

Today’s hearing in front of the Senate Finance Committee will, unfortunately, be another wasted opportunity. Surely, Senators will make grandiose speeches and be shocked at the cost of drugs. They will also continue to support the very policies that are causing the problems the hearing is supposed to address. A February 25th editorial from the New York Times exemplifies why this opportunity for effective reforms may very well be lost. The Senate hearing is not a day of reckoning as the Times claims. It should be an opportunity...

In California, politics is taking precedence over patients. That’s the only conclusion to draw from Gov. Gavin Newsom’s recently released health care plan. He’s looking to impose price controls on prescription drugs. He’d like to expand Medicaid to undocumented immigrants up to the age of 26. He’s called for re-imposing the individual mandate, which would require everyone in the state to obtain coverage. He wants to subsidize the purchase of health insurance for those making up to six times the poverty...

This year, 1.7 million Americans will be diagnosed with cancer. For over 600,000 of them, that diagnosis will prove fatal. But there’s hope on the horizon. More Americans are surviving cancer each year, according to a new study from the American Cancer Society. The cancer death rate declined precipitously between its peak in 1991 and 2016. Absent that decline, 2.6 million more cancer patients would have died during that period. By one estimate, 73% of recent survival gains are due to...

*Featured in Kaiser Health News Morning Briefing* Today, Type 1 diabetes patients pay twice as much for insulin as they did in 2012. This is outrageous — but drug companies aren’t to blame. The problem is a dysfunctional supply chain that benefits everyone except patients. In today’s system, insurers hire third-party firms, known as pharmacy benefit managers, to manage drug plans. These PBMs negotiate with drugmakers and have the power to decide which drugs are covered by each plan. Each year, manufacturers dole out $150...

In response to the problem of rising list prices for drugs, elected officials continue to propose counterproductive reforms. Whether it is importing drugs from Canada or indexing U.S. drug prices to the prices charged in other countries, these policies will make the current bad situation worse because they fail to understand the disincentives that are the root cause of the problem. Until now. A proposal by Health and Human Services Secretary Alex Azar, if implemented, would meaningfully improve the pharmaceutical market. The...

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, the plan could increase health care spending elsewhere, as patients inevitably lose access to medicines. So while the savings is questionable, the negative health impact on patients is certain. Sec. Azar ought...

Congress is poised to consider a bill that would allow Americans to import prescription drugs from Canada. The bill’s authors, Sens. Chuck Grassley (R-Iowa) and Amy Klobuchar (D-Minn.), label their effort as a bipartisan push to “help Americans who struggle to pay exorbitant prices for medication.” It’s noble of lawmakers to tackle prescription drug costs. Eight in ten Americans are concerned about the price of medicines, according to a Kaiser Family Foundation survey. But the Grassley-Klobuchar bill isn’t the right solution. While it...

By Henry I. Miller, M.S., M.D. and Jeff Stier Trump administration officials keep searching for solutions to rising prescription drug prices, which are increasing faster than inflation. "Drug makers and companies are not living up to their commitments on pricing. Not being fair to the consumer, or to our Country!" President Trump tweeted on Jan. 5. Most of the administration's suggested remedies have been threats or the imposition of various types of price controls. On Thursday, Jan. 31, Department of Health and...

In mid-January, three Democrats — Vermont Sen. Bernie Sanders, Maryland Rep. Elijah Cummings, and California Rep. Ro Khanna — introduced legislation that aims to reduce prescription drug prices. Their plan would essentially peg U.S. drug prices to those in five foreign countries where prices are typically lower because their governments forcibly control them. It would also open our borders to imported drugs from Canada and other countries. Their proposal is painfully shortsighted. It would slow pharmaceutical innovation and expose patients to dangerous counterfeits in...