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.

February 29, 2024 Issues, Price and Costs

Vermont Senator Bernie Sanders called the CEOs of several major pharmaceutical firms to testify earlier this month before the Senate Health, Education, Labor and Pensions Committee, where he serves as chairman. The hearing's official purpose was to discuss prescription drug pricing. But it mainly offered Sanders a forum to castigate the pharmaceutical industry. "The overwhelming beneficiary of high drug prices in America is the pharmaceutical industry," Sanders said. "The United States government does not regulate drug companies. With a few exceptions, the drug companies regulate...

February 24, 2024 Issues, Price and Costs

The Left has long insisted that medical debt is a national crisis and that the federal government needs to do something about it. They appear to have new ammunition in the form of an analysis published this month by the Peterson Center on Healthcare and KFF. Nearly one in 12 adults — 20.4 million people — had medical debt in 2021, according to the brief. But a closer look at the numbers shows that these figures rely on some questionable assumptions. The Peterson-KFF study counts any adult with “over $250 in unpaid medical bills as...

February 9, 2024 Issues, Price and Costs

By Sally Pipes & Wayne Winegarden There they go again. Free-market advocates are jeopardizing pro-market healthcare reforms based on an inability to recognize how cronyism tars the current industry dynamics. That distinction between companies operating in a free market and companies using cronyism to flourish in a government-dominated market is the key. At question are the operations of pharmacy benefit managers (PBMs). PBMs serve large insurers, employer-sponsored health plans, and government health plans. The three largest PBMs control nearly 80% of the...

November 13, 2023 Issues, Policy Proposals, Price and Costs

The price of health insurance has skyrocketed in recent years, according to a new report from the Kaiser Family Foundation. Average annual premiums for employer-based family plans have risen by 22% percent since 2018, to nearly $24,000. It's tempting to see these hikes as a shameless cash-grab by avaricious insurers. But there are more systemic factors fueling the growth of health costs. Only by attacking these root causes can policymakers bring down the cost of coverage without compromising the quality of...

November 2, 2023 Price and Costs

Last year’s Inflation Reduction Act is not proving popular with a group it aims to help — older Americans. That’s according to a recent survey from Commitment to Seniors. More than 80% of likely voters over 55 believe the IRA hasn’t helped them personally in terms of lowering the impact of inflation, consumer costs, and prescription drug prices. Almost eight in ten say the IRA is a failure one year after its passage....

October 25, 2023 Issues, Price and Costs

There's a paradox at the center of American healthcare policy. The government will spend just shy of $2 trillion subsidizing healthcare this year — including over $500 billion on Medicaid and the Children's Health Insurance Program. But low-income Americans still struggle to afford care. According to one recent poll by the Kaiser Family Foundation, nearly seven in ten Americans earning less than $40,000 a year find it at least somewhat difficult to pay for healthcare. Read the full article at Newsmax...

October 18, 2023 Price and Costs

The pharmaceutical supply chain is rife with misaligned incentives. Due to these disincentives, policies that make sense under most market conditions create problems that harm patients. Coupling the fees of pharmacy benefit managers (PBMs) to the discounts they negotiate exemplifies this problem. Read the full article by Sally Pipes and Wayne Winegarden at Forbes.com...

October 5, 2023 Policy Proposals, Price and Costs

The Biden administration recently announced the first 10 drugs that will be subject to price controls under Medicare as part of the Inflation Reduction Act. The president celebrated the occasion, saying, "We took on Big Pharma and special interests, overcoming opposition from every Republican in Congress, and the American people won." "Won?" The next generation of American patients will not feel like they "won" when they're stuck waiting even longer for effective treatments -- if those treatments ever materialize. Read the full...

October 3, 2023 Price and Costs

A government shutdown has been averted—for now. Congress approved a continuing resolution this weekend that funds the government through mid-November. But the weeks-long fight put other important legislative work on hold. Take the “Lower Costs, More Transparency Act.” Late last month, lawmakers pulled it from the floor ahead of an expected vote. The sponsors of the bipartisan bill—whose name is an apt summary of its goal—did so after a whip count revealed they would not have enough votes to pass it. Whatever...

September 26, 2023 Policy Proposals, Price and Costs

The House Committee on Oversight and Accountability met last week for a hearing on the Inflation Reduction Act's first year. As one of the witnesses pointed out, the law's implementation — particularly its drug pricing reforms — have already run afoul of some of our government's most basic norms of transparency and accountability. The IRA gives federal officials the authority to dictate what Medicare pays for certain medicines — a scheme intended to reduce the government's drug bill. Late last month,...

September 21, 2023 Issues, Price and Costs

Members of Congress on both sides of the aisle are examining how industry middlemen known as Pharmacy Benefit Managers (PBMs) are driving up healthcare costs. Rightly so. PBMs have been manipulating the complex and opaque drug pricing system at the expense of patients for far too long and Congress must act. Read the full article by Sally Pipes and Wayne Winegarden at RealClearHealth...

August 29, 2023 Innovation, Price and Costs

President Joe Biden celebrated a milestone today—but American patients have no reason to cheer. The White House announced the first 10 prescription drugs that, starting in 2026, will be subject to price controls authorized by the Inflation Reduction Act. Democrats laud these price controls, which they glibly dub "negotiations," as a way to lower drug costs for seniors on Medicare. But in the not-too-distant future, people of all ages may look back and rue this day—as the beginning of the end of...

August 25, 2023 Issues, Price and Costs

The Biden administration claims to support price transparency in healthcare. The Centers for Medicare and Medicaid Services has formally warned hundreds of hospitals to comply with federal rules requiring them to post their prices publicly. And the agency just rolled out a new rule designed to “advance prescription drug transparency in Medicaid.” But that drug pricing rule has little to do with transparency. It’s an opaque bid by the White House to impose price controls on drug makers. If implemented, it...

August 21, 2023 Issues, Price and Costs

Who says bipartisanship is dead? In the House and Senate, members of both parties are advancing legislation to check the power of pharmacy benefit managers (PBMs), the self-dealing middlemen in the drug supply chain that inflate Americans' spending on prescriptions by billions of dollars a year. By shining a light on PBMs' questionable business practices, and potentially cracking down on some of their anticompetitive behavior, lawmakers can help patients fill their prescriptions without breaking the bank....

July 25, 2023 Issues, Price and Costs

The last few months have seen a flurry of activity on Capitol Hill regarding prescription drug reform, with a particular focus on pharmacy benefit managers, or PBMs. The U.S. Senate Finance Committee is set to markup a bipartisan PBM reform bill within the next few days. The House Energy and Commerce Committee and the House Committee on Education and the Workforce are weighing PBM reform legislation of their own. All these efforts have an eye on reducing drug costs for patients. Click to read the full article in...

July 17, 2023 Issues, Price and Costs

The Senate Health, Education, Labor, and Pensions (HELP) Committee is currently reauthorizing the Pandemic and All-Hazards Preparedness Act (PAHPA), which is supposed to help us prepare for the next public health emergency. Never missing an opportunity to impose price controls on anything and everything, Senator Bernie Sanders (I-VT) wants to use this legislation to benchmark the price of innovative medicines that received some federal support at the basic research stage to the prices in the other G-7 nations. Since these nations...

June 28, 2023 Issues, Price and Costs

It’s been less than a year since Democrats enacted the Inflation Reduction Act, which gives Medicare the power to set the prices of certain medicines. Those price controls have yet to go into effect. But Democrats already want more. They’ve introduced new legislation that would amp up those price controls — and even permit the government to refuse to cover drugs in order to drive a harder bargain with pharmaceutical companies. As for the patients who would benefit from those drugs —...

June 26, 2023 Issues, Price and Costs

Hundreds of lifesaving therapies will never be invented, and as many as 1.1 million jobs will be lost if Senate Democrats successfully expand their prescription drug price-fixing program, according to a major new study. The study, conducted by the research group Vital Transformation, modeled the effects of the SMART Prices Act. Sponsored by 28 Democratic senators including Amy Klobuchar, D-Minn., Peter Welch, D-Vt., and Elizabeth Warren, D-Mass., the bill would expand the price-control scheme approved last year for certain drugs under Medicare as part...

June 19, 2023 Issues, Price and Costs

Pharmaceutical giant Merck announced last week that it is taking the federal government to court over the Inflation Reduction Act's drug pricing reforms. The lawsuit alleges that the law's Medicare price negotiation program violates some of the most fundamental rights guaranteed by the U.S. Constitution. "This is not 'negotiation,'" the company says in its official complaint. "It is tantamount to extortion." Such strong language is justified. The IRA's price controls represent an unprecedented act of government intervention into the prescription drug market — one that...

May 10, 2023 Issues, Price and Costs

Today , Sen. Bernie Sanders, I-Vt., will haul executives from three insulin manufacturers and three pharmacy benefit managers before the Senate Health, Education, Labor and Pensions Committee for a hearing on "the need to make insulin affordable for all Americans." Sen. Sanders is sure to call the pharmaceutical executives — who represent Eli Lilly and Company, Novo Nordisk, and Sanofi — greedy, as he has repeatedly during his tenure atop the HELP Committee. This time, though, PBMs will get some heat, too. Good....