Reflections on High Drug Pricing in America: Where We Are and Where We’re Headed

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This blog first appeared on the Center for Total Health blog.

Consider the following results from a recent Kaiser Family Foundation (KFF) poll on prescription drugs:

  • 58 percent of Americans take at least one prescription drug — and a quarter of Americans take four or more.
  • 80 percent of Americans say the cost of prescription drugs is unreasonable — even though 74 percent say they can afford them easily. But, the more prescription drugs Americans take, the harder it is for them to afford the costs.
  • Most Americans believe that drug company profits are a major driver of costs.
  • Majorities of Democrats, Independents and Republicans think there should be more regulation of drug pricing.
Norman Ornstein speaks at the Kaiser Permanente Institute for Health Policy Forum: Addressing HIgh Drug Pricing at the Center for Total Health.
Norman Ornstein speaks at the Kaiser Permanente Institute for Health Policy Forum: Addressing HIgh Drug Pricing at the Center for Total Health.

This KFF poll is consistent with others, and also fits into a larger political context. Health care costs are a major issue on peoples’ minds in 2018, and have become a major driver of elections. The upset victory of Democrat Conor Lamb in a special congressional election in Pennsylvania in March, in a district Donald Trump carried by 20 points, is a case in point: polls there showed that the issue of health care costs was pivotal.

Democrats were energized by voters’ reaction in this case, while Republicans in Congress and in the Trump Administration were made even more aware of the importance and power of this issue as the 2018 elections approach. FDA Commissioner Scott Gottlieb made his position clear early on in his tenure, bluntly taking drug companies to task for manipulating the generic marketplace. In an interview with Kaiser Health News, Gottlieb said “he will do everything ‘within my lane’ to combat high drug prices and that he sees drug companies ‘gaming the system to try to block competition’ in a multitude of ways in the marketplace.”

Meanwhile, Department of Health and Human Services Secretary Alex Azar made clear in his confirmation hearing that combating high drug prices would be a top priority for him; one of the first steps he took when he assumed office was to choose a CVS Caremark executive Daniel Best, who had been vice president of industry relations for CVS’s Medicare Part D business, to be his top deputy on drug pricing.

Advancing the Dialogue: Takeaways from the Institute for Health Policy Forum

This context provided a frame for the comprehensive discussion of high drug pricing at the 2018 Kaiser Permanente Institute for Health Policy Forum at the Center for Total Health in Washington, D.C. in early April.

Former FDA Commissioner Mark McClellan, MD, PhD
Former FDA Commissioner Mark McClellan, MD, PhD, shared his perspective on the causes of and potential solutions to high drug pricing.

Former Food and Drug Administration Commissioner and head of Centers for Medicaid and Medicare Services Mark McClellan did a colloquy with Dora Hughes of Sidley Austin; there were panels with academics, medical practitioners, state legislators, and others working in the field. The discussions looked at the nature of the problem and possible solutions.

There was considerable discussion of one topic very much in the news: the move by Aetna and UnitedHealth, supported by many pharmaceutical companies, to give their drug company rebates directly to the consumers. That would ease the criticism coming from the insured using the drugs, but would also increase premiums by merely shifting the costs.

Some of the initiatives to reduce drug prices have come from the states, but as Oregon State Rep. Andrea Salinas noted, many of those efforts have been stymied by litigation brought by pharmaceutical companies.

A larger unanswered question is whether Congress will act, which would require bipartisan cooperation, something in very short supply in an age of partisan tribalism. During my session at the forum, I offered some reasons to be relatively optimistic. First, there is a record of bipartisan cooperation in areas of health policy not directly linked to the Affordable Care Act. The most notable was the near-unanimous support during the Obama

Administration for the 21st Century Cures Act which provided more money for health research, a streamlined approach to drug approval, and significant reform of the mental health system. Another example was the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), more commonly known as the “doc fix.” (Of course, as the Institute for Health Policy’s Director Murray Ross pointed out, it took seventeen years to get a permanent fix to Medicare compensation for physicians!)

Looking Ahead: What’s Possible for 2018?

There are two conflicting dynamics. The first is the one this blog started with, the strong public support for, and demand for, action to reduce high drug prices — a demand likely to grow as the fall approaches and insurance premiums rise. Republicans braced for a “blue wave” of Democratic party gains in Congress and the states will be eager to find something to counter the impact of this potent issue, and Democrats who have pushed for changes that include more transparency in pricing, Medicare power to negotiate and easier access to cheaper generics, would be hard-pressed to reject a bill that includes some of these elements.

But this Congress, with plenty of political turmoil and a schedule including limited days in session with nervous members eager to get out of Washington and head to the campaign trail (while spending more of their time raising money) will have a difficult time crafting any bill and moving it through both the House and Senate.

So while we can expect some movement in the executive branch this year, more of the action, if there is any, will come from the states and the providers. With one certainty — the issue of high drug prices will not be fading any time soon.

About our guest author:  Norman Ornstein is a resident scholar at the American Enterprise Institute and a contributing editor and writer at The Atlantic. His latest book, with EJ Dionne and Thomas Mann, is One Nation After Trump: A Guide for the Perplexed, the Disillusioned, the Desperate and the Not-Yet-Deported.

About the Center for Total Health: The Kaiser Permanente Center for Total Health hosts internal and external educational events. All events – including annual banquets, quarterly meetings, trainings, interviews – can be customized to incorporate the interactive exhibits that make the Center for Total health experience both fun and informative for attendees. If your organization is interested in hosting an event, please send them an event request via the website.