It’s time to stop talking past each other on drug pricing

Today, the curtain will go up on another act of political theatre in Washington with lots of half-truths, outright myths, and political messaging coming from politicians. 

What is good in politics is not the same thing as good policy. I wish that we could have an honest conversation to understand better how the healthcare system in the U.S. works and ways that we can help it work better for patients. While we are unlikely to get that today, here are a few things I wish would get the attention they deserve.  

While I understand the temptation to look outside the U.S. for answers, adopting the practices of international systems that limit patient access isn’t a serious answer to the question of how the U.S. healthcare marketplace can work better for patients. 

  • U.S. patients typically have earlier access to newly launched products than patients in other countries with a single negotiator.
  • As a percentage, what we spend on drugs compared to overall health spending in the U.S. is one of the lowest of economically-similar countries.  
  • The gulf between what drug makers receive (net price) and list price is significant, and a recent report projected that net drug prices are likely to drop between 2% and 5% yearly over the next five years.
  • For over thirty years, drug companies have given the Medicaid program the best price among nearly all purchasers. Safety net hospitals and others accessing drugs via the 340B program get similar discounts. For many drugs, the size of this discount is so large that states get them free or, starting in 2024, will be paid for using them. Medicare drug plans are also able to tap into discounts that average 23% but, in many instances, are 50-80% of the list price.
  • In the U.S., we value market forces such as competition that bring the price of about 90% of prescribed medicines (e.g., generics) here to lower levels compared to what we pay versus our peers. As a reminder, there are drug shortages for generic medicines with prices that are too low.

We are in a golden age of biopharmaceutical innovation, and the U.S. is the R&D leader of the world. 

  • Last year, the U.S. Food and Drug Administration’s Center for Drug Evaluation and Research (CDER) approved 55 novel drugs – the second-highest over the last 30 years
  • There is a complex ecosystem of investors and payors funding this innovation. There are large costs – and risks – with bringing a molecule from the lab to a patient, and recent NPC research suggests that most of the cost of that risk is borne by drug developers.  
  • Physicians credit pharmaceutical and biopharmaceutical innovation for the majority of improvements in outcomes for patients diagnosed with debilitating health conditions since 1990.
  • Proposals such as the interagency guidance on the use of march-in rights are likely to have a serious effect on innovation. In comments to the National Institute for Standards and Technology, NPC pointed out that exercising march-in rights to control costs would be ineffective and has the potential to chill innovation with minimal gain.

Central planning and price regulation don’t lead to innovation. Are we interested in having a serious conversation about how to make the healthcare marketplace work better for patients in the U.S., or are we more interested in political theatre?