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.

August 26, 2019 Policy Proposals, Price and Costs

Making medicines more affordable for patients promises to be a top policy priority for Congress when it returns from its August recess. Achieving this goal does not require new, elaborate, government programs or regulations. It requires reforms that will empower biosimilars to more effectively compete against originator biologics. To see why a little background is needed. Consider that the growth in spending on drugs that includes all discounts and rebates grew 3.5% annually between 2009 and 2018 according to IQVIA’s annual review of...

August 12, 2019 Blog, Price and Costs

The Trump Administration on July 31 announced steps that could lead to the importation of prescription drugs from Canada, where prices are lower. This strategy is favored by President Trump but has long been opposed by many Republicans. Health and Human Services Secretary Alex Azar said that the policy would enable Americans to “get the benefit of the deals that pharma themselves are striking with other countries.” The fate of this initiative is uncertain after the failure of the administration’s last two proposals...

August 7, 2019 Blog, Price and Costs

The Trump Administration's Department of Health and Human Services (HHS) has officially proposed legalizing the importation of drugs from Canada (e.g. the Safe Importation Action Plan). Canadians’ reactions provide an important perspective demonstrating why drug importation will harm the U.S. Despite assurances from Prime Minister Justin Trudeau, Canadians are worried that the U.S. proposal will impose severe costs on Canadians. Their concerns are well founded. Typical of their reaction, the Canadian Pharmacists Association (CPhA) has noted that the Canadian medicine supply is not equipped...

August 5, 2019 Policy Proposals, Price and Costs

A smarter way to curb drug prices through imports By Henry I. Miller, M.S., M.D. and John J. Cohrssen The Trump administration last week announced steps that could lead to the importation of prescription drugs from Canada, where prices are lower. It is a goal supported by President Trump, but long opposed by many Republicans . . . Instead of pushing for piecemeal steps that will continually run into political opposition and legal challenges, the administration should take a broader approach — by establishing...

July 26, 2019 Blog, Price and Costs

From the time we were toddlers, it has always been tempting to bang the square peg into the round hole. After all, there is always that one square peg that seems like it should just about fit into that round hole, and it would feel so satisfying if it did. Alas, square pegs don’t fit into round holes. The analogy is apropos for Congress’ current approach to drug prices. In the latest iteration, the Senate Health, Education, Labor and Pensions (HELP)...

July 19, 2019 Policy Proposals, Price and Costs

Report: Growing biosimilar market could save billions in health spending by Paige Minemyer Growing the biosimilar market could lead to significant healthcare cost savings, according to a new report, with the opportunity for billions in cost reductions. An analysis (PDF) from the Pacific Research Institute, a free market think tank, shows today the limited biosimilar market share saved about $253.8 million per year in spending. If biosimilars gained a 25% market share, those savings would increase to $2.5 billion, they said. If the market share increased further,...

July 18, 2019 Policy Proposals, Price and Costs

Cures for Cancer Could Grow on Trees By Kathleen L. Hefferon and Henry I. Miller Politicians talk a lot about farming but seldom about “pharming,” even though the latter can also have a big impact on Americans’ pocketbooks—and their health. The punny name refers to genetically modifying plants such as corn, rice, tobacco and alfalfa to produce high concentrations of pharmaceutical ingredients. Many common medicines already come from plants, including morphine, the fiber supplement Metamucil and the cancer drug Taxol. Yet heavy-handed...

July 12, 2019 Policy Proposals, Price and Costs

Biosimilars Struggle to Gain Market Share in the U.S., Analysis Shows By Alex Keown Over the past several years, the U.S. Food and Drug Administration has approved a number of biosimilar medications, therapies that have similar properties to a branded drug, but are different in composition, which differentiates them from generic drugs. The approval of biosimilar treatments has been supported at the highest levels as a means to increase competition in the market and help regulate some of the high costs of prescription...

July 11, 2019 Briefs, Industry Trends, Price and Costs

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. ...

June 27, 2019 Price and Costs, Value

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...

June 26, 2019 Price and Costs, Studies, Value

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...

June 11, 2019 Policy Proposals, Price and Costs

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...

May 29, 2019 Blog, Price and Costs

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...

May 20, 2019 Price and Costs

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...

May 15, 2019 Price and Costs

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...

May 7, 2019 Price and Costs

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...

April 30, 2019 Price and Costs

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...

April 1, 2019 Policy Proposals, Price and Costs

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...

February 26, 2019 Price and Costs

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...