Drug Price Legislation – Are Drug Prices a Problem?
As you may have heard, the Build Back Better Act (BBBA) is a non-starter. Senator Manchin from West Virginia just couldn’t find a way that he could support the bill and it has hung in limbo since his announcement of non-support in December. Since then, there has been much talk and conjecture and discussion, but it has become apparent that the BBBA, in its present form, is dead. A new approach surfaced last week, breaking up the proposed legislation into separate bills with the items that Senator Manchin supports and passing those pieces. The impetus behind this approach is to give President Biden something he can announce as an accomplishment during the March 1st State of the Union address. There obviously will be some changes from the original BBBA but one thing that is almost certain to remain, unless there is some immediate action, is the drug price setting legislation that was in the original bill.
Over the last few years there has been pressure, from both political parties, to do something about drug prices. The common theme has been that the drug companies were the villains who went unfettered as they raised drug prices. The solution has always been for the government to insert itself into the equation and set prices at a “fair” level, with fair never being accurately defined. As we approach this important point where we are facing huge and non-reversable changes to Medicare Part D, I have some facts that should be considered.
The drug companies continue to voice their desire to be part of the solution. There are results based pricing and yearly caps that could be considered. There are a myriad of possible changes that the drug companies would like to discuss and consider. They want to be part of the solution.
Everyone needs to focus on the facts concerning drug prices. In 2021, the list price of drugs, the price that many of the patient’s out-of-pocket costs are based on, rose less than the Consumer Price Index (CPI). There are many parts of our healthcare system that rose more than the CPI, but not the list price of drugs.
The net price of drugs, the amount the drug manufacturer receives, dropped by 1.2% in 2021. That’s right, the net price dropped! This is the 4th year that the net price has dropped. Let’s put this in perspective. If the drug manufacturer received $100 for their prescription drug in 2017, they received $97.50 in 2018, $95.60 in 2019, $93.70 in 2020 and $92.60 in 2021. If the drug companies were trying to raise prices so they would get paid more each year, they have failed miserably.
It seems to me that allowing our government to fix the price for drugs in an environment where the list price of drugs is increasing less than the CPI and the drug companies are getting almost 8% LESS than they were 4 years ago is a case of Washington trying to fix a problem that isn’t a problem anymore. We can’t let those who govern us do something that is not needed and will screw up and cripple the innovation that we depend on to improve our quality of life and even save our lives.
While it may be politically expedient to tout the taming of drug prices through price fixing it is the pinnacle of hubris to come up with a supposed solution that doesn’t really fix a problem. There are many things that can be done to save money, especially for the patient. Let’s attack the real problems that can be identified and fixed. Talking with all the stake holders is an important first step.
I ask all of you to contact your federal Representative and Senators and tell them you would like them to focus on the real problems that face our healthcare system. It’s important to make your feelings known. The time to Speak Out is now.
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