Republicans promise to lower drug costs — don't believe them

Republicans promise to lower drug costs — don't believe them
© Greg Nash

Sen. Charles GrassleyCharles (Chuck) Ernest GrassleyTax season could bring more refund confusion Graham vows Biden, Ukraine probe after impeachment trial Social security emerges as latest flash point in Biden-Sanders tussle MORE (R-Iowa), chairman of the Senate Finance Committee, held a hearing on drug prices and several CEOs of the largest pharmaceutical companies in the world testified. Ostensibly, the hearing is to look at why drug prices are so high in the United States and discuss laws that could be implemented by Congress, or regulations imposed by the Trump administration, to help reduce the cost of medicine for the American people.

As someone who believes that drug costs in this country are out of control, on the one hand, I am pleased that this congressional took place. However, I strongly doubt that Republicans on Capitol Hill or President Donald TrumpDonald John TrumpWarren: Dershowitz presentation 'nonsensical,' 'could not follow it' Bolton told Barr he was concerned Trump did favors for autocrats: report Dershowitz: Bolton allegations would not constitute impeachable offense MORE, are serious about doing anything about the costs of medicine because they probably don’t want to threaten drug companies’ profits or stock prices.

All Republicans want to do is talk tough about forcing drug companies to lower their prices — without creating any real structural changes to our health-care system to prevent drug prices from going up. For example, when the President Tweeted last May that “massive” reductions in drug prices were just weeks away. No surprise, that did not happen.


Not to be deterred by the facts, the President tweeted that drug prices are coming down in 2018, a completely false claim. In reality, the cost of medications in the United States simply aren’t rising as fast as before.

Health and Human Services Secretary, Alex Azar, also likes to use Twitter to attack drug prices. But, again, Twitter threats cannot bring down drug prices. It’s no surprise that the drug industry are not threatened by Azar, after all, he used to work for Eli Lilly, a massive pharmaceutical company.

If you want some real insight into how the Trump administration plans to lower drug prices, look at their recent effort to reduce drug prices by eliminating the rebates that pharmaceutical companies pay to pharmaceutical benefit managers, also known as PBMs, who negotiate drug prices for health insurers. While the rebate system is by no means perfect, it does incentivize drug companies to lower their prices and those costs can be passed on to patients.

There are two serious flaws with this proposal. First, the rebates are typically used for drugs where there are multiple competitors.

For example, one drug company that sells a blood pressure medication, may compete with another drug company that sells a blood pressure medication, by offering larger rebates to PBMs. However, if you need a drug — for example a cancer treatment costing over $100,000 — where there are few competitors, the drug company has no incentive at all to offer any rebate. The PBM gets no rebate and the patient ends up paying full price.


Second, this proposal is a volunteer program. The White House is telling drug companies to take the savings they earn from no longer offering rebates to lower their prices. Are we supposed to believe that the drug companies will just lower their prices? Not even Alex Azar believes this is possible. Last year, he stated that, “I am not counting on the altruism of pharma companies lowering their prices."

Recently, an old friend and former colleague of mine in Congress, Ronnie Shows (R-Miss.), spoke about the people he used to represent on Capitol Hill, still coming to him to ask for help with rapidly increasing health-care costs. This struck a chord with me, because I also hear from friends, neighbors and family members about their struggles to pay for prescription drugs. I hate to say it, but the best chance Americans have to see lower drug prices is a return to Democratic control of Washington. After all, Republicans just don’t seem to have what it takes to lower drug costs.

Former Rep. Silvestre Reyes (D-Texas) represented the 16th district in Texas from 1997 - 2013.