drug prices – The Health Care Blog

Community Health Plans Are Serious: Support Major Federal Action to Reduce Rx Drug Costs

Jun 17, 2021• 2

By CECI CONNOLLY

Equal treatment under the law. A foundational pillar of American life. Except when it comes to drug makers who benefit from favorable treatment by the federal government.

For far too long, prescription drug companies have profited immensely under a system that affords them monopolistic powers to set prices devoid of government or public scrutiny.

Even during the pandemic, while much of the economy took a beating, the pharmaceutical industry continued to benefit from the high prices they charge. In fact, 9 of the 10 biggest profit margins recorded last summer belonged to drug companies.

As the nation’s economy sputters back, Big Pharma continues to raise prices and block patient access to lower-cost alternatives. It is beyond time to tame the soaring prices of prescription drugs once and for all.

For years, health care players have skirted around concrete actions to truly impact drug prices. Efforts to cut costs for consumers have translated to higher costs for health plans, resulting in a cost shift instead of a cost reduction. We, as private, nonprofit insurers, believe in the ambition and innovation possible in a free market – but the market has failed in this instance and it’s time for the government to take action.

That is why the Alliance of Community Health Plans (ACHP) is putting its support behind reforms that can make a real, lasting impact for consumers and the entire health system. For the first time, a national health care payer organization is stepping up and supporting pragmatic and progressive reforms that can truly begin to rein in the price of prescription drugs.

This includes backing the dramatic step to grant the Secretary of Health and Human Services the power to negotiate lower prices for the highest-priced medications for which there is no competition, in addition to other actions.

Saying No to the Drug Crisis

Nov 27, 2018• 15

By BRIAN KLEPPER

In a recent essay, VIVIO Health’s CEO Pramod John guides us through four sensible drug policy changes and supporting rationales that could make drug pricing much fairer. Reading through it, one is struck by the magnitude of the drug manufacturing industry’s influence over policy, profoundly benefiting that sector at the deep expense of American purchasers. As Mr. John points out, the U.S. has the world’s only unregulated market for drug pricing. We have created a safe harbor provision that allows and protects unnecessary intermediaries like pharmacy benefit managers. We have created mechanisms that use taxpayer dollars to fund drug discovery, but then funnel the financial benefit exclusively to commercial interests. And we have tolerated distorted definitions of value – defined in terms that most benefit the drug manufacturers – that now dominate our pricing discussions.

The power of this maneuvering is clear in statistics on health industry revenues and earnings. An Axios analysis of financial documents from 112 publicly traded health care companies during the 3rd quarter of 2018 showed global profits of $50 billion on revenues of $636 billion. Half of that profit was controlled by 10 companies, 9 of which were pharmaceutical firms. Drug companies collected 23% of the total revenues during that quarter, but retained an astounding 63% of the profits, meaning that the drug sector accounts for nearly two-thirds of the entire health care industry’s profitability. Said another way, the drug industry reaps twice the profits of the rest of the industry combined.