Consumers hoping a couple of recent policy proposals might lower prices for their prescription drugs may be out of luck, at least for now.
Earlier this year the Trump administration had proposed a rule that would have required prescription drug manufacturers to disclose list prices for drugs advertised on TV. Drug makers would have had to tell the public the list price of a 30-day supply of any drugs covered under the Medicare and Medicaid programs that cost at least $35 a month.
Some experts argued the rule would not have been very effective because consumers often don’t pay the list price anyway. Discounts and rebates negotiated by pharmacy benefit managers reduce the price, although some insurers may require people with high deductible plans to pay the list price until they meet their deductible.
Almost half of all Americans with a health insurance plan that offers drug coverage must pay a minimum of $1,300 out of pocket for an individual and $2,600 for a family before they reach their deductible and benefits kick in. The administration had argued that showing what the drugs would cost people before their drug benefits took effect was important.
This modest move to transparency in a very opaque industry was a start.
But right after the July 4 weekend, a U.S. District Court judge in Washington, D.C., blocked the Trump administration from implementing the rule. He sided with a coalition of drug companies including Eli Lilly, Merck, and Amgen and the Association of National Advertisers, which had joined the suit.
Drug companies, it seems, weren’t keen on price transparency.
The judge ruled the government did not have the authority to compel drug companies to disclose their prices.
A few days after the judge’s ruling came another blow to lower pharmaceutical prices. This time the Trump administration killed its own proposal released earlier this year. That proposal had aimed at the pharmacy benefit managers, commonly known as PBMs, the controversial middlemen in the drug pricing chain, hired by insurers to help manage the drug benefits they sell.
The Trump administration’s proposed rule would have made it illegal for drug makers to offer rebates to the PBMs and insurers unless the middlemen passed any savings on to patients in the form of lower co-pays and coinsurance. It would have applied only to Medicare drug plans, not coverage from private insurers.
Proponents hoped it would wipe out incentives the PBMs have for steering patients toward more expensive drugs when cheaper generics are available.
But the Trump administration later had second thoughts, saying that “based on careful analysis and thorough consideration, the President has decided to withdraw the rebate rule.” Washington insiders believed that drug makers would pocket the money they saved if they no longer offered rebates. That, in turn, might prompt insurers to raise premiums for Medicare’s drug coverage.
The finger points once again at drug companies that are fighting hard to make sure another proposal — one that would tie Medicare payments for some drugs to prices people in other countries pay — goes nowhere. A survey by the consulting firm PwC noted that drug company executives found this proposal the “most concerning” idea on the table because it really has potential for lowering prices.
What about reimporting cheaper drugs from Canada? That idea is popular with the public but not with the FDA or the drug companies.
In the meantime, drug prices keep rising.
Analysts at Wells Fargo & Co. say drug makers are getting “aggressive” in their price hikes again and have raised the price of medicines by 27 percent on average in June. An analysis by Rx Savings Solutions, an industry consultant, reports that so far this year some 3,400 drugs have experienced a price hike averaging 10.5 percent, about five times the rate of inflation.
It boils down to patients versus the moneyed interests, and so far patients are losing. Patients will continue to struggle paying for their medicines while profits for all the pharmaceutical system’s players continue to stack up.
Trudy Lieberman, a journalist for more than 40 years, is a contributing editor to the Columbia Journalism Review, where she blogs about health care and retirement at cjr.org. Write to Trudy at [email protected]. Send comments to [email protected].