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.

May 23, 2022 Issues, Price and Costs

Hospitals are shoring up their balance sheets on the backs of cancer patients, according to a new study published in JAMA Internal Medicine. Researchers looked at 25 of the top cancer medications distributed at 61 cancer treatment centers across the country over the course of six months. They found that the clinics charged private insurers anywhere from 118% to 634% above what it cost them to acquire the drug. It shouldn’t take a team of medical researchers to find out how much...

May 19, 2022 Issues, Price and Costs

More than eight in 10 hospitals are flouting a federal rule requiring them to publish their prices, according to a new report. That rule has been in force for over a year now. It’s long past time for hospitals to comply. The lack of transparency in the health care market is costing patients billions of dollars. Since Jan. 1, 2021, the Centers for Medicare and Medicaid Services have mandated that hospitals share how much they charge for at least 300 different “shoppable...

May 2, 2022 Issues, Price and Costs, Radio, Resources

Listen to the author of a new study discuss how America’s broken third-party healthcare payment system prioritizes government and insurance companies as the largest payers, leaving patients with higher out-of-pocket costs, greater exposure to healthcare financial risk, and reduced access to care.  To learn more, read the "Coverage Denied" series from PRI's Center for Medical Economics and Innovation. ...

April 28, 2022 Briefs, Price and Costs, Studies

America’s broken third-party healthcare payment system prioritizes government and insurance companies as the largest payers, leaving patients with higher out-of-pocket costs, greater exposure to healthcare financial risk, and reduced access to care - finds the latest paper in the Coverage Denied series released today by the Center for Medical Economics and Innovation at the nonpartisan Pacific Research Institute. Click here to read the brief “The healthcare marketplace should prioritize the needs of patients, but our broken third-party payment system caters to insurers...

April 20, 2022 Issues, Price and Costs

Sustainably addressing the problems of rising prices and declining quality requires reforms that empower patients and doctors, improve price transparency, and eliminate the perverse incentives of our current health insurance system that drive up costs and limit care. Instead of addressing the health care system’s core deficiencies, policymakers push for counterproductive policies like price controls. Efforts in Indiana show that politicians do not need to pass legislation to implement bad ideas. The threat of legislation is sufficient. Indiana’s Senate President Pro Tempore...

March 14, 2022 Issues, Price and Costs

As President Biden's recent State of the Union address made clear, drug pricing will remain a top policy issue for the foreseeable future. The president is correct that something must be done, but his proposals are wrongheaded and will only make things worse. Instead of focusing on government price controls, Congress should remove the obstacles limiting patient control and choice. The claim that prices are lower, and quality is higher, when consumers have more choices is typically uncontroversial. Yet, for some reason...

March 8, 2022 Issues, Price and Costs

Popular wisdom is often wrong. Consider, for example, how it views organic agriculture, which has grown to a $48 billion a year industry in the U.S. Organic products are sold at outlets ranging from local farmers' markets to large supermarket chains, and many people assume that there is something more natural, wholesome, or environmentally sustainable about them. None of that is true. What's remarkable about this agriculture sector is that the government's extensive promotion has been a hoax from the beginning, having nothing...

March 8, 2022 Issues, Price and Costs

Late last month, the Federal Trade Commission announced it would seek public comments on the ways pharmacy benefit managers distort the prices of prescription drugs. PBMs deserve the scrutiny, as they're to blame for much of the rise in prescription drug costs. Insurers hire PBMs to negotiate drug prices with manufacturers and determine which medicines end up on a plan's formulary. To guarantee their drug has a spot on the list, pharmaceutical firms routinely offer these gatekeepers deep discounts on medications. Savings on...

March 1, 2022 Briefs, Policy Proposals, Price and Costs, Studies

READ THE REPORT The problem of drug affordability is caused by the perverse incentives created by the third-party payer system that have disempowered patients in favor of insurers and other supply-chain intermediaries. The insurance flaws have created pricing systems that inequitably transfer a disproportionate share of drug costs on to patients. This arrangement inappropriately imposes a drug affordability problem on patients who require expensive medicines. The insurance flaws also incent benefit design policies that create additional affordability burdens and unnecessarily increase...

February 28, 2022 Issues, Price and Costs

Too often, regulations undermine the competitive process in the name of promoting competition. The ill-conceived Right to Repair legislation exemplify the problems and risks. Under the pretense of promoting competition, states as diverse as Texas and California, Arkansas and Hawaii have all considered bills that would violate medical device companies’ intellectual property rights. While many have been defeated, some legislators seem intent on advancing one businesses interest over another, which undermines competitive efficiency and, in the case of medical devices, creates risks to patient care. At issue are the rules...

February 10, 2022 Issues, Price and Costs

Last week, President Joe Biden announced the re-launch of his "Cancer Moonshot" initiative, a project he created in 2016 while serving as Vice President in the Obama administration. The ambitious effort aims to "end cancer as we know it today" by, among other things, halving the death rate from the disease by 2047. That goal is laudable. It will also be impossible to achieve if the president continues to make prescription drug price controls a top administration priority. The only way to spur the...

February 8, 2022 Issues, Price and Costs

According to a new Bureau of Labor Statistics report, consumer prices across a range of goods and services rose 7% between December 2020 and December 2021. It's the largest annual inflation growth in more than 40 years. But the BLS data did reveal one surprising finding. There was zero prescription drug price inflation last year. Yet, as part of their moribund Build Back Better Act, Democrats are continuing to propose price controls on drugs. It makes no sense. Prescription drugs were an outlier in the BLS report....

January 12, 2022 Briefs, Industry Trends, Price and Costs

BY WAYNE WINEGARDEN AND CELINE BOOKIN Part 1 of the Coverage Denied series documented how distortions in the U.S. healthcare system turned the important financial risk management service of health insurance into a barrier to care and an important driver of health care inflation. The insurance industry’s adverse impact on costs is ironic given its current focus on implementing cost control measures.  Unfortunately, the problems of increasing obstacles to care and decreasing health care affordability are the expected outcomes from the current...

December 29, 2021 Price and Costs

For current and future taxpayers, 2021 was a brutal year—at least when it comes to healthcare spending. Congress and the Biden administration approved tens of billions in new expenditures. Much of that money was, or will be, wasted on inefficient programs and subsidies that do little to improve the quality of care that Americans receive. But the bill will come due regardless. The president kicked off his first term with a massive $1.9 trillion stimulus package, the American Rescue Plan. About $34 billion went to...

December 21, 2021 Price and Costs

Wayne Winegarden, PhD, Discusses the Value of an Interchangeable Designation for Adalimumab Biosimilars December 19, 2021 Skylar Jeremias The Center for Biosimilars® interviewed Wayne Winegarden, PhD, senior fellow in business and economics at Pacific Research Institute (PRI) and director of PRI’s Center for Medical Economics and Innovation. Click here to watch. Winegarden talked about how interchangeability designations are more important for biosimilars referencing adalimumab (Humira) because they would not administered by a physician in a clinic, unlike oncology biosimilars, which pharmacists do not interact with...

December 13, 2021 Price and Costs

Using the ruse of “price negotiation”, the proponents of the Build Back Better legislation are pushing an ill-fated drug price control plan. Patients will bear exceptionally large costs should their idea of government-directed prices become law. These costs will include lower health outcomes due to reduced access to innovative drugs. They will also include increases in other types of healthcare spending as less drug access would, ironically, increase hospitalizations and use of other healthcare services and could more than offset any...

November 29, 2021 Blog, Coronavirus, Price and Costs

This month, Delta Airlines began levying a $200 monthly surcharge on unvaccinated employees enrolled in the company’s health plan for the financial “risk” they are supposedly imposing on the company. The airliner is not alone. A major health-care system in Louisiana plans to do the same for unvaccinated spouses on its health plan next year. And a retailer in Utah announced last month that unvaccinated employees would have to pay extra for insurance. In other words, medical underwriting — the practice of...

November 12, 2021 Blog, Issues, Policy Proposals, Price and Costs

Inflation is worrying Americans, and for good reason. The latest inflation report, the Consumer Price Index (CPI) released on November 10th, showed that prices were 6.2 percent higher in October 2021 compared to October 2020. More troubling, this was the fifth month in a row where the annual growth in CPI inflation exceeded five percent. Digging deeper into the CPI data provides important perspective on another pressing issue – the growth in drug prices. While fluid, the so-called Build Back Better...