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Drug Pricing
February 6, 2020

Do Not Be Surprised If the Next Big Health Care Debate Is About Drug Prices

Author Affiliations
  • 1Henry J. Kaiser Family Foundation, San Francisco, California
JAMA Health Forum. 2020;1(2):e200110. doi:10.1001/jamahealthforum.2020.0110

Every Democratic presidential debate so far has featured a slugfest among the candidates over the question of building on the Affordable Care Act (ACA) by adding a public option vs scrapping the current insurance system in favor of Medicare for all.

This is, to be sure, an important question with big consequences for people in the United States who have health coverage, the affordability of health care, and the revenues physicians and hospitals receive. But this debate has consumed a lot of oxygen, leaving little for other health care issues.

For example, the Democratic candidates have spent little time talking about President Trump’s support for a lawsuit that would overturn the ACA, including protections for people with preexisting conditions. There also has not been nearly as much discussion of lowering prescription drug prices, which is a top priority for the public.

Not Much Daylight Between Democratic Candidates

Presidential primaries tend to magnify differences among candidates, who are jockeying to differentiate themselves. On prescription drug prices, there is not a lot of daylight between the leading candidates—they all support allowing the federal government to negotiate drug prices. Right now, under the legislation that created the Medicare drug benefit enacted in 2003, the federal government is prohibited from negotiating drug prices, leaving that to individual private insurance plans. One result of that legislation is that the United States has drug prices that are much higher than in other countries.

The positions of the Democratic presidential candidates are aligned with a sweeping bill that recently passed the House of Representatives, which would allow the federal government to negotiate prices for at least 50 and up to 250 drugs each year, not only for Medicare but also on behalf of private insurance plans sold to employers and individuals. Drug prices would be capped at 120% of those charged in other high-income countries. Drug companies that refuse to negotiate would face steep financial penalties (which is what would give the government leverage to get price concessions). The Congressional Budget Office (CBO) estimates that governmental negotiation of prices would save the federal government about a half trillion dollars over the next decade.

Talk but Little Action Yet From Trump Administration

President Trump has said he would veto the House-passed bill. He has instead indicated support for a bipartisan bill from the Senate Finance Committee, which has not yet come up for a vote and it is unclear if that bill has enough support to pass. The Senate bill does not give the government authority to negotiate drug prices, taking the significantly more modest step of penalizing drug companies that hike prices faster than inflation (a similar provision that is also in the House bill). Passage of major legislation is uncommon during an election year, and in this case the parties seem far apart, making progress even less likely.

President Trump has talked a lot about drug prices, but as yet cannot point to much in the way of action. The 1 tangible step the president has taken is a requirement for drug companies to disclose list prices in television advertisements, but that rule is tied up in the courts and has yet to go into effect. The president had proposed a far-reaching plan to ban rebates paid by drug manufacturers to insurers and pharmacy benefit managers, but later withdrew the proposal after government actuaries said it would increase federal government spending and premiums paid by those aged 65 years or older. The president also took credit for the recent slowdown in drug pricing increases, though how much he had to do with that slowdown is unclear.

Recently, President Trump issued proposed guidance that would allow states to create mechanisms to import cheaper drugs from Canada. Of course, the reason drugs are less expensive in Canada is because the Canadian government regulates the prices, so what the president has proposed is effectively importing price controls.

Proposals to address drug prices—including requiring the disclosure of list prices in advertisements, allowing the federal government to negotiate prices, and permitting the importation of lower-priced drugs from Canada—all attract strong, bipartisan support of three-quarters of the public or more.

As Always, There Are Trade-offs

Not surprisingly, the drug industry vigorously opposes these measures, arguing that they would harm innovation. There are certainly trade-offs inherent in any effort to drive down drug prices. For example, the CBO projected that under the House-passed bill, there would be about 8 fewer drugs introduced over the next decade and about 30 fewer drugs introduced during the decade after that (out of an expected 300 new drugs over a 10-year period). What is not clear is how many of these foregone medications would represent true innovations rather than drugs that offer minimal clinical benefit over currently available options.

Individuals in the United States fill an average of 11.6 retail prescriptions per person per year, so the way people most frequently interact with the health care system is at the pharmacy counter, making drug costs a salient issue for voters. Three in 10 adults say they have not taken a medication as prescribed during the past year due to the cost.

Some 54% of the public disapproves of the way President Trump is handling the cost of prescription drugs prices compared with 30% who approve. We could see more proposals from the president this year as he tries to reverse public perceptions.

Big Debate on Drug Prices in 2021?

The dominance of Medicare for all vs a public option in the health care debates among Democrats so far suggests one of those ideas could be a signature issue for a Democratic president in 2021 if the party sweeps the election this fall. That is certainly possible. But do not be surprised if drug prices—an issue with broad, bipartisan appeal among voters—instead becomes a marquee issue for Democrats.

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Article Information

Open Access: This is an open access article distributed under the terms of the CC-BY License.

Corresponding Author: Larry Levitt, MPP, Henry J. Kaiser Family Foundation, 185 Berry St, Ste 2000, San Francisco, CA 94107 (larryl@kff.org).

Conflict of Interest Disclosures: None reported.

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    1 Comment for this article
    Next Big Health Care Debate
    Lawrence Danto, MD, FACS | UCDavis, Michigan Medicine
    A long over due debate for sure . The price of drugs in the US is unconscionable. But more than the debate: Patient oriented action is long over due.