The fractious Congress returns after Labor Day (oh, joy!), but this fall there just happens to be an excellent chance the Senate could take a significant, almost uniquely bipartisan, step toward bringing down the cost of prescription drugs by passing the Prescription Drug Pricing Reduction Act (PDPRA).
Jointly sponsored by Republican Chuck Grassley and Democrat Ron Wyden, chair and ranking member of the Senate Finance Committee, respectively, the bill would cap out-of-pocket drug costs for Medicare Part D patients. It will also penalize drug companies that raise prices faster than the rate of inflation as well as requiring them to justify price increases in public filings.
Considering that in Hawaii the average annual cost of brand name prescription drugs increased 58% between 2012 and 2017, while the annual income of Hawaii residents rose only 15%, even these two modest advances could produce significant savings.
The problem starts when the drug company secures an exclusive patent on a drug and goes on the market without competition. Most often, one drug, no matter how essential, usually equals one company selling it. Imagine what a Ford would cost if there was no Honda, Kia or Chevrolet. Unlike cars, where the prices are all over the internet and in the newspapers, contrast this with the fact that Big Pharma fights tooth and nail to hide its retail drug prices from public view, successfully halting administration efforts to require that retail prices be published.
Moreover, the drug industry has embarked on a new scam: using captive industry-owned or controlled “charities” to make it look like patients with limited income will get free or reduced-cost pricey drugs.
Those ads we see on TV about all the help the drug manufacturers will give us to purchase their product is a clever scheme to keep the prices paid by insurance companies and the general public artificially high and at the same time reap up to double the tax deduction by contributing to their own captive charitable funds. As exposed recently by an article in The Economist magazine, now fully one half of America’s 20 largest charities are affiliated with pharmaceutical companies!
These strange charities then use the tax-deducted company-contributed funds to “buy” the pricey drugs for the patient who lacks any insurance — but, of course, charging as close to retail as possible to insurance companies, hospitals, local governments, and private patients who can afford the drugs.
We need to urge Sens. Brian Schatz and Mazie Hirono to support the PDPRA as a modest first step to lowering prescription drug prices. But that’s not nearly enough in the long term.
In the House of Representatives, Speaker Nancy Pelosi is working on drug price legislation to allow Medicare to negotiate lower drug prices and apply those discounts to private health plans across the U.S. This type of large-scale negotiation is what allows drug prices to be kept under control in Canada and most European countries.
Unfortunately, though, few Hawaii residents can just hop over the Canadian border to fill a suitcase with affordable prescription drugs. There is also momentum building for requiring drug companies to match the average price charged for the same medication in large economy countries generally.
There are some signs that the tide may finally be turning in the battle to make life-saving medicine affordable. More than two dozen states have passed at least some legislation aimed at restraining drug prices. But without a national umbrella approach, it isn’t likely that we’ll see any major control over prescription drug prices anytime soon.
So while we’re gnashing our teeth when we’re treated to ever more congressional gridlock, let’s take at least a minute to urge passage of the Prescription Drug Pricing Reduction Act right away and then show our support for a national bill to enable Medicare and other national medical insurance programs to bargain down drug prices in a major way.
Arne Werchick is a resident of Kailua-Kona
