Taking aim at rising drug prices
Prescription drugs play a critical role in helping to prevent, manage and even cure various diseases and conditions. Yet despite the enourmous progress we’ve made in medical breakthroughs, the opposite is true of our progress to lower drug prices. Brand name drug prices in particular have increased at 10 times the rate of inflation over the past five years—creating a health crisis that leaves one in four Americans unable to afford the medications they need.
Key factors that drive up drug prices include lack of transparency regarding the pricing of prescription medications and limited competition in the drug marketplace. For example, while drug manufacturers often cite the cost of funding research, developing a potentially life-saving new drug and navigating complex approval processes as reasons for continued increases, many spend as much as 50 percent more on advertising than they do on research and development. The failure to provide full and clear information about true development costs—and separating those from expenditures such as expensive ad buys—keeps both policymakers and the public in the dark.
Our current patent policies also play a role in escalating drug prices and limiting competition. Generic and biosimilar drugs offer many patients an affordable alternative to more expensive brand-name medications. However, current federal law allows brand manufacturers to seek dozens of patents for each drug that last for up to 20 years – keeping affordable generic and biosimilar drugs off the shelves and limiting doctors to brand-name drugs their patients may not be able to afford.
These policies also allow pharmaceutical manufacturers to further stall generics and biosimilars by filing patents for trivial updates, such as pill color and packaging, which extends a drug’s exclusivity on the market and blocks competition.
The consequences of this cycle are devastating. Sixty percent of Americans and 90 percent of seniors rely on prescription medications to stay healthy, but rising drug prices are now leaving many with a choice nobody should have to face: paying for the medications they need or paying for other life necessities.
Take Humira®, for example, a drug commonly used to treat arthritis and other chronic medical conditions. Over the last five years, the price of Humira® has been raised 12 times, resulting in a 248 percent price increase.
While the impact drug prices are having on individual patients cannot be overstated, taxpayers in every corner of the country – regardless of whether they take prescription medications—also are being overburdened. Prescription drug spending is growing faster than any other major medical good or service, increasing the cost of Medicare and Medicaid, while adding to our $21 trillion national debt.
To tackle this crisis head on, we must focus on market-based solutions that:
- Strengthen Transparency: Everyone is entitled to know the list price of the medications they need, as well as reasons for increases in that list price.
- Boost Competition: Generic and biosimilar drugs offer an affordable alternative to expensive, brand-name medications, but current policies limit competition and consumer choice. By enacting legislation like the CREATES Act, we can increase competition and discourage abuses in the prescription drug market.
- Focus on Value: We need clear policies that ensure a drug’s price is linked to its value. That means we need evidence as to how new (and often expensive) drugs compare to older, tried-and-true medications. We also should test new payment models where manufacturer payment is based on how well a drug performs in a patient population.
Working together with policymakers, physicians, health plans, and pharmacists, the Campaign for Sustainable Rx Pricing is working to promote proposals that ensure families have access to affordable medications and reduce overall spending.
Learn more about policy solutions to address rising drug prices here.
About The Campaign for Sustainable Rx Pricing (CSRxP)
CSRxP is a nonpartisan coalition of organizations committed to fostering an informed discussion on sustainable drug pricing and to developing bipartisan, market-based solutions that promote competition, transparency, and value to improve affordability while maintaining patient access to innovative prescription drugs. Our members represent organizations including consumers, hospitals, physicians, nurses, pharmacists, employers, pharmacy benefit managers and insurance providers.
All product names and brands are property of their respective owners and used for identification purposes only, and are in no way associated or affiliated with the Blue Cross and Blue Shield Association. Use of these names and brands does not imply endorsement.