Price and Costs

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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.

December 11, 2017 Price and Costs

Tomorrow, the Senate Health, Education, Labor & Pensions Committee (HELP) will discuss a proposed alteration to Medicare. The proposal comes from a report released in late November by the National Academies of Sciences, Engineering, and Medicine. NASEM urges Congress to allow federal bureaucrats to negotiate Medicare drug prices directly with pharmaceutical companies. Currently, private insurance companies conduct these negotiations. The academies believe the federal government could use its bulk purchasing power to obtain lower drug prices for Medicare beneficiaries. NASEM is wrong. Giving the government negotiating authority would stifle...

October 12, 2017 Price and Costs

Abraham Kaplan famously noted that if you, “give a small boy a hammer, he will find that everything he encounters needs pounding.” Put differently, solving problems requires the right tool, not the convenient tool. Congress should remember this wisdom in its upcoming deliberations regarding the cost of prescription drugs. The convenient tool when it comes to the health care system’s affordability problem is price controls. After all, the government can limit price increases in any part of the health care system...

October 10, 2017 Price and Costs

The U.S. health care system needs systemic reforms that comprehensively address the problems of declining quality and rising costs. Alas, beneficial systemic reforms will not be implemented any time soon. There are still opportunities for Congress to implement tailored reforms that can help address these problems in the near term. One such opportunity is reforming the out-of-control 340B drug pricing program (the federal drug discount program created under the Veterans Health Care Act of 1992). The intent of the 340B program...

September 20, 2017 Price and Costs

Imagine a pharmaceutical market designed by Lewis Carroll’s Mad Hatter. In contrast to almost every other market, he might begin by charging wholesale prices that are higher than retail prices. He would then make sure that the higher wholesale price goes, the lower retail prices can become. And finally, he would ensure that not everyone could purchase their medicines at the low retail prices – although the reason why would be convoluted and random. While we can be certain that the...

September 11, 2017 Price and Costs

The refrain that pharmaceuticals are driving the health care affordability problem has been repeated so often that it is becoming an illusory truth – people believe it to be true simply because they have heard it repeated so often. Obviously, repeating the same incorrect statement over and over again does not make it so. It does squander valuable time as legislatures continually consider bills with no hope of improving the quality, or reducing the costs, of health care. For instance, California is...

July 21, 2017 Price and Costs

The drama of “repeal and replace” resembled an unfunny version of a Monty Python skit, continuously claiming that it was “not dead yet”, and even that it was “getting better” only to be put out of its misery in the end. The end of repeal and replace will not end the push for health care reform. There are simply too many problems that must be addressed – one way or another. One of these issues gaining traction is the growing push...

May 9, 2017 Price and Costs

Click here to read PRI's new issue brief, The Economic Costs of Pharmacy Benefit Managers Express Scripts, the largest pharmacy benefit manager (PBM) in the nation, is discovering just how much customer service matters. It may also be discovering that suing your biggest customer in court is generally not considered good customer service. Should Anthem Inc. withdraw its business from Express Scripts as it has indicated, then clearly the largest for-profit health insurance company will have made the determination that the value...

April 27, 2017 Price and Costs

The growing problem of health care affordability requires prompt and effective policy solutions. However, just as the wrong medical diagnosis will not cure a patient, and may make the patient even sicker, the wrong policy solution will not address the U.S. health care affordability problem, and may even worsen the problem. Proposals to import pharmaceuticals from overseas are the wrong policy solution. Nevertheless, both Hillary Clinton and President Trump advocated for drug importation on the campaign trail; and, Senator Bernie Sanders...

March 7, 2017 Price and Costs

Imagine if you never had to directly pay for your morning cup of coffee again. Instead, a coffee insurer guaranteed that, for a small co-pay, you could enjoy a cup of coffee every morning. Sounds good? The catch, and there is always a catch, is the caveat “directly pay.” In this bizarre world, you would still be paying for your cup of coffee every morning, but instead of paying your favorite barista, you would now pay your local coffee insurer. But, bureaucracy loves...

March 2, 2017 Price and Costs

President Donald Trump is not the only politician saying he is going to work to get drug prices down. Oregon lawmakers are already patting themselves on the back for tackling drug prices. Rep. Mitch Greenlick (D-Portland) says the measure, Oregon House Bill 2387, could be a model for national reform. "If we can actually get it done," he recently explained, "it will show the country how to get those costs down." Let's hope he's wrong. The reform he's supporting is nothing...

February 24, 2017 Price and Costs

A recent oped in The Hill by MedShadow Foundation founder Suzanne Robotti claims that permitting Americans to import prescription drugs from Canada would save dollars and lives. It would do neither. Prescription drug importation has several notable proponents, like Sens. John McCain (R-Ariz.), Amy Kobuchar (D-Minn.), and Bernie Sanders (I-Vt.), along with President Donald Trump. Without question, all of them sincerely want to make medicines more affordable. But importation wouldn't save patients much money. Instead, it would hamstring the Food and...

January 10, 2017 Price and Costs

Minnesota Senator Amy Klobuchar just introduced a federal budget amendment that would legalize the importation of foreign prescription drugs. This particular policy change has long topped Democrats' health care wish list, but shockingly, they might find support across the aisle this year, as President-elect Trump has spoken glowingly of importation. The bipartisan support doesn't make the proposal any better an idea. Legalizing importation would expose Americans to substandard foreign pills and undermine domestic drug innovation. Importation proponents say that American patients could...

January 5, 2017 Price and Costs

The imminent repeal of the Affordable Care Act (aka Obamacare) is garnering most of the health care headlines, and rightly so. But, the focus on Obamacare should not overshadow other health care modifications that may be considered during the 115th Congress. Paramount among these proposals is the issue of drug importation. Currently, it is illegal to import drugs into the U.S. from other countries. It is rumored that several Senators will, in short order, attach amendments to the current budget resolution...

June 27, 2016 Price and Costs

California is losing the battle against opioid addiction. Every 45 minutes, someone in the Golden State overdoses. Fifty percent more people overdose today than in 2006. Fortunately, the Food and Drug Administration just approved the anti-addiction treatment Probuphine. It’s an implant placed in a person’s upper arm, where it releases a steady stream of an anti-addiction drug called buprenorphine to help addicts stay sober. Medical breakthroughs like this one could become rarer if a ballot measure under consideration in California is ratified...

June 6, 2016 Price and Costs

Imagine being denied treatment for cancer because Washington bureaucrats decided that a cutting-edge new therapy that could cure you just wasn’t “cost effective.” That’s already happening in Britain under its government-run health care system, the National Health Service. And Medicare officials are poised to bring similar policies here. The NHS’s “Cancer Drugs Fund” restricts physicians’ ability to prescribe half of all oncology medicines. If a medicine doesn’t extend the average cancer patient’s life span by a set length of time, which varies...

January 21, 2016 Price and Costs

Like your iPhone? Federal officials designed it. Couldn't live without the Internet? Thank Uncle Sam — he invented it. Sick and need new medicine? Don't worry — the government is here to help. This fantastical line of thinking — that because the government funded basic, early-stage research, it can claim credit for a final product decades later — underpins the latest calls for more federal control of drug prices. Such calls are grossly ill-informed and demonstrate a deep misunderstanding of the drug...