Mike's Blog

Health care reform efforts comprise a disparate array of activities over and above the routine evolution in health care and health care delivery due to progress in terms of advancing science and technology. While these activities may focus on increasing health care accessibility or addressing provider burnout, the vast majority of efforts are targeting overall health costs, but most discussions concern issues that usually result in an ‘above my paygrade’ conclusion. Drug prices clearly fall into this category. That said, there have been multiple efforts over the last several years that have attempted to tackle this issue with somewhat creative and diverse approaches. While there may be little that individual health care providers can do to directly engage in this arena, the potential impact on patients and their ability to afford treatments that our translational science is generating is something that must be appreciated. In addition, hopefully, the next generation of clinical researchers will be able to participate in the development of workable solutions. So, what has been tried and what efforts are underway? Let’s review a sampling of activities.

One point to recognize is that in spite of what many see as drug prices in the US at odds with pricing in other countries, significant drug shortages continue to plague our health system (see here and here). An additional consideration is the recognition that drug pricing versus drug development costs are two distinct estimates where the latter also includes development failures as well as ‘generally accepted accounting practices’ (GAAP) that incorporate the ‘time value of money’ concept resulting in inflated cost estimates relative to actual out of pocket costs. Furthermore, none of these considerations are relevant for off patent, generic drugs where only production, fill/finish, storage, distribution, and regulatory compliance costs matter. 

There are many different approaches the USG is pursuing. The most prominent player in Congress has been Senator Bernie Sanders, chairman of the Senate Health, Education, Labor, and Pension (HELP) Committee. Earlier this year, Senator Sanders grilled pharma CEOs and the HELP Committee released a report comparing selected drugs costs in the US versus other countries. At the same time, Senator Sanders also focused on NIH as another lever to control drug pricing. Another Congressional focus earlier this year was potential pharmacy benefit manager (PBM) reform. PBMs are drug middlemen, handling the distribution of drugs between pharmaceutical manufacturers to pharmacies as well as payment transfers from insurers. Significant PBM reform efforts failed earlier this year. Alternative approaches to traditional PBMs have been undertaken while calls for reform continue to be heard (see here and here).

One prominent approach to drug pricing was embedded in the Inflation Reduction Act (IRA) which granted CMS authority to negotiate on a limited selection of drugs. While ongoing (negotiated prices won’t kick in until 2026 at the earliest), there are several lawsuits contesting CMS’ authority. Another component of the IRA offers rebates when drug prices rise faster than inflation. Lastly, a perennial candidate for consideration has been utilization of the Bayh-Dole Act, although not surprisingly, entities in addition to big pharma and biotech are against this mechanism. 

Finally, there has been some progress recently, most notably with insulin which has garnered quite a bit of attention. Even here, the story is somewhat complicated with multiple administrations taking credit, industry was a key participant. While claiming credit for swift decisive action, insulin is unlikely to be a model for a more comprehensive drug pricing mechanism for the future.

Stay cool and enjoy summer!

Go and play. Run around. Build something. Break something.

Climb a tree. Get dirty. Get in some trouble. Have some fun.

-Brom