With the Iowa caucuses and New Hampshire primary taking the spotlight, national attention on the presidential race and the issues motivating voters continues to ramp up. Voters in every corner of the country, on a bipartisan basis, agree on one thing: prescription drug prices are too high. Over the last several years, policymakers, candidates and stakeholders across the political spectrum have offered proposals and divergent ideas to bring down unsustainable drug prices and provide relief to the millions of Americans who rely on medicine for their care. With the complexity of the issue and competing solutions, how can voters make sense of it all?
We must start at the root of the problem: drug companies set their prices as high as the market will bear then raise them arbitrarily whenever they choose. Even though nearly 90% of drugs prescribed in the U.S. are generic drugs with an average patient copay of less than $6, brand manufacturers continue to push prices higher and higher for brand-name medications, often, multiple times a year. Unfortunately, those brand-name drugs drove most of the $344 billion the U.S. spent on prescription drugs in 2018 – a number that is expected to keep rising. A clear signal: in the first three days of 2020, drug makers raised prices on over 300 prescription drugs, including widely used drugs like Revlimid, Ibrance, Xeljanz, and Truvada. We have continued to see price hikes throughout January and can expect to see more the rest of the year.
Brand drug companies know that in order to keep these prices high, they have to protect their drugs from competition for as long as possible—so they use anticompetitive tactics and strategies to keep generic and biosimilar alternatives out of the market for as long as possible.
These efforts take many shapes, from filing hundreds of patents on the same drug to lengthen its monopoly protection, to making minimal changes to a product and then removing the original product from the market to avoid competition.
In the absence of competition, these expensive brand-name drugs have increased drug spending, year after year. For example, this year AbbVie already raised the price of Humira, a product that it has protected with hundreds of patents, by 7.4%—after combined price hikes of 20% in 2018 and 2019. Longer periods of monopoly power for drug companies have driven the drug prices Americans pay higher. In fact, a 2019 study by Matrix Global Advisors demonstrated potential savings of $31.7 billion if we could stop the gamesmanship. Delays in competition enable the unchecked price increases and something must be done to change this.
In order to meaningfully lower drug prices for patients for the long-term, voters should ask candidates if they will support the following policies to lower drug prices:
- Tackling the root cause of drug companies’ high prices by ending Big Pharma’s anticompetitive tactics and unreasonable extensions of monopoly pricing power.
- Reforming the patent system to prevent gaming that results in a lack of timely competition or choice in the marketplace.
- Stopping Big Pharma’s misuse of FDA processes required for generic drug approval to block the entry of more affordable medicines.
- Allowing health plans and the pharmacy benefit managers (PBMs) they work with greater flexibility to negotiate and protect patients from brand drug companies’ price hikes.
Voters have long demanded lower drug prices. Now they have a chance to ask presidential candidates and candidates in every election to support the policies that will deliver savings at the pharmacy counter and in premiums. The need has never been more urgent.