Will Washington finally do something about high drug prices?

Will Washington finally do something about high drug prices?
© iStock

If people in this polarized nation can agree on one thing, it is that prescription drug prices are too high, and that the federal government should do something about it. But it seems unlikely that Congress or the administration will do enough this year to satisfy an enraged public.

In the end, if Washington doesn’t overcome industry resistance to reform — in particular, letting the government negotiate the price of drugs purchased by Medicare — whatever actions it takes will be seen as too little, too late by American voters in 2020.

ADVERTISEMENT

The reasons why incumbents can be expected to pay a price at the polls are no surprise. A new survey by the Kaiser Family Foundation finds that one in four people taking prescription drugs say they have difficulty affording their medication. What is more, 79 percent see the current costs of drugs as unreasonable.

Another poll released last fall by NORC at the University of Chicago and my organization (the non-profit and non-partisan West Health Institute), found that 78 percent of the public name high health-care costs as its highest priority. Fewer than 25 percent of voters approve of the ways the Trump administration and Congress are handling the high cost of prescription drugs.

But so far, this firestorm of public indignation has not been enough to rally Congress to swift and decisive action. A hearing last week in which the Senate Finance Committee heard testimony from seven pharmaceutical industry CEOs and leaders came off with a few whimpers, but not a bang.

There was none of the confrontational cross-examination seen in the famous congressional grilling of tobacco executives at a hearing a quarter century ago. Last week’s hearing was a case in which the watchdog didn’t bark.

There are some proposals from the administration and before Congress that stand a reasonable chance of passage in this session. The Trump administration has several proposals that ostensibly would offer lower out-of-pocket costs for American consumers, which include changes to Medicare Part D and Part B.

The CREATES Act, sponsored by an array of Republicans and Democrats, would create a speedier and stronger legal process for generic manufacturers to challenge branded drugmakers that withhold drug samples in order to obstruct generic competition.

These proposals benefit from the fact that they are not the most vociferously opposed by Big Pharma. They are like chicken soup to treat a cold: they certainly won’t hurt and they might even help. But these solutions are by no means the strongest medicine available.

Democrats running or eyeing a run for the White House are offering ideas that are far less accommodating of Big Pharma. They are unlikely, however, to become law without a Democratic Congress and administration in power.

For example, Sen. Bernie SandersBernie Sanders'Medicare for All': The hype v. Maryland's reality Biden says he supports paying campaign staff minimum wage Biden's lead narrows in early voting states: poll MORE (I-Vt.) is proposing that drug prices in the United States be tied to an index of drug prices in foreign countries, where drugs are sold at lower costs. Sen. Elizabeth WarrenElizabeth Ann WarrenWarren warns another 'economic crash' is coming The Hill's Morning Report — Mueller Time: Dems, GOP ready questions for high-stakes testimony Biden's lead narrows in early voting states: poll MORE (D-Mass.) has proposed a bill that would effectively create a government-run pharmaceutical manufacturer to mass-produce generic drugs and bring down prices. Sens. Jeff MerkleyJeffrey (Jeff) Alan MerkleyAl Franken says he 'absolutely' regrets resigning Dems open to killing filibuster in next Congress Democrats warm to idea of studying reparations MORE (D-Ore.), Kamala HarrisKamala Devi HarrisThe Hill's Morning Report — Mueller Time: Dems, GOP ready questions for high-stakes testimony Biden's lead narrows in early voting states: poll New CBS poll shows Biden with 7-point lead in New Hampshire MORE (D-Calif.) and Amy KlobucharAmy Jean KlobucharThe Hill's Morning Report — Mueller Time: Dems, GOP ready questions for high-stakes testimony Democratic strategist predicts most 2020 candidates will drop out in late fall The Hill's 12:30 Report: Trump hits media over 'send her back' coverage MORE(D-Minn.) introduced the CURE High Drug Prices Act, which would allow the federal government to block price increases on certain drugs.

There is a litany of other bills. Among them are a bill that would allow the importation of drugs from Canada, another that would force price transparency on drug middlemen, and another that would force drugmakers to justify dramatic price increases.

Then there is the elephant in the room. President TrumpDonald John TrumpChelsea Clinton announces birth of third child Ukrainian officials and Giuliani are sharing back-channel campaign information: report Trump attacks 'the Squad' as 'racist group of troublemakers' MORE repeatedly promised in 2016 to rein in runaway drug costs by letting Medicare negotiate prices with pharmaceutical companies. Allowing Medicare to seek lower prices is a no-brainer. As the single largest payer for health care in the United States, Medicare is the gateway to a vast marketplace of nearly 60 million people who happen to be the highest consumers of pharmaceuticals.

But with the pharmaceutical industry’s main trade group spending more than $50 million in the past two years alone on lobbying, its passage into law this year seems highly unlikely.

There is, however, one key finding in the Kaiser Family Foundation survey that should weigh heavily on every member of Congress and the administration. Ninety percent of Democrats, 87 percent of Independents and 80 percent of Republicans want to allow the government to negotiate lower prices for Medicare drugs.

Big American drug companies have not been using profits from high prices to ramp up investment in drug development. According to William Lazonick, pharmaceutical companies in the S&P 500 distributed over 100 percent of their combined profits to shareholders in buybacks and dividends — 12 percent more than they spent on research and development.

“With most of their compensation coming from exercising stock options and stock awards, senior executives benefit immensely,” the two scholars recently wrote in The New York Times. “In 2017, 28 drug executives in the top 500 (S&P 500 companies) averaged more than $41 million in total compensation, with 83 percent in stock compensation.”

In 2020, if politicians insist on giving priority to the greed of the drug industry over the pleading of voters, they could pay an enormous price at the polls.

To fix the $3.5 trillion-dollar quandary that is what America spends on health care — with its spiraling costs, opaque pricing and lack of accessibility to services for millions — we need vision, leadership and bold action from a Washington willing to take on special interests. Right now, that is sorely lacking.

Shelley Lyford is president and chief executive officer of West Health, a nonprofit, nonpartisan family of health-care research, policy and philanthropic organizations.