By Jill Zorn
Consumers are losing ground as there continues to be inaction in addressing the unbridled growth of prescription drug prices.
“The rising cost of prescription medicines is putting pressure on public and family budgets in the United States,” is written in the introductory statement from a report issued by the Department of Health and Human Services (HHS) on March 9.
The report shows that spending on medications rose by over 12 percent between 2013 and 2014, and by another estimated 8 percent between 2014 and 2015. While the number of prescriptions per person is going up, “Price changes are contributing more to the growth in spending than is growth in volume of prescriptions.”
Unwilling to keep waiting for the federal government to act, states are starting to introduce bills that address high drug prices. Last week I wrote about legislation that puts limits on patients’ monthly out-of-pocket payments.
Model transparency legislation, designed and promoted by the insurance industry, takes a different approach. It is aimed at reducing the full cost of drugs — what the insurer is paying, rather than what the patient may be paying out-of-pocket.
Bills introduced in several states require pharmaceutical companies to disclose what it cost them to develop a drug. Some bills ask for information on manufacturing and marketing expenses, too. This approach is based on the mounting evidence that the high prices for many drugs bear no relationship to their development costs.
But it requires a huge leap of faith that the disclosure of the gap between cost and price will shame the industry into taking action to lower prices. There is already a certain amount of shaming going on in Congressional hearings and in the media, and so far, prices are not retreating.
In fact, the problem of out-of-control medication prices may not be solved until we actually set maximum prices — as almost every other country in the world does.
That is why legislation in Massachusetts, S. 1048, “An Act to promote transparency and cost control of pharmaceutical drug prices”, is worth noting. The bill, which will have a public hearing on March 22, takes transparency to the next level.
First, the legislation require companies to reveal, “…what drugs really cost to manufacture, how much people in other countries pay, and the actual research costs for our most expensive drugs.” But it then uses this transparency to take action. The bill asks the Health Policy Commission to analyze the information, and “set maximum drug prices if it finds egregious examples of unfair price gouging in our prescriptions.”
As usual, Massachusetts is pushing the envelope on regulation. Given that Massachusetts is a state that houses the headquarters for many biotech and pharmaceutical firms, the bill is likely to face stiff opposition from the industry, which is clearly not interested in revealing the secrets of their research, marketing or manufacturing costs.
But if this legislation passes, at least there is a Health Policy Commission in place that has the capacity to use cost information to actually lower drug prices.