In Search of a Prescription for Runaway Drug Prices

The problem of runaway prescription drug costs continues to make headlines and bedevil consumers, payers and policy makers. Unfortunately, while the problem is clear, solutions are much harder to come by due to the limited political space to advance alternatives.

Even modest suggestions, such as changing the way Medicare reimburses for Part B drugs, increasing price transparency, or making sure that physicians have complete and unbiased information about drug effectiveness and side-effects, are met with stiff resistance from the pharmaceutical industry lobby. And such proposals, welcome as they would be, would make only a small dent in the fast-rising cost of drugs.

The Democratic candidates for president have proposed more far-reaching policy solutions, such as allowing Medicare to negotiate prices and allowing re-importation of drugs manufactured abroad, but most observers consider these proposals to be dead on arrival in Congress. And even these proposals stop short of recognizing the inconvenient truth that our approach to developing and bringing prescription drugs to market is fundamentally flawed. To complicate matters further, insurers have looked to restricting access and excessive cost-sharing as strategies to push back against the drug companies, but such actions put a tremendous burden on patients who rely on high-cost medications (e.g. people with cancer, MS, HIV, etc.).

With little hope for Congressional action, consumer activists must look to the states. To make progress on this issue, advocates will have to navigate a shifting web of alliances. Advocates will have to work with drug companies when the fight is about preserving affordable access to medications, but they will need to shift their alliance to payers when the issue is the underlying costs of the drugs themselves.

Once More, This Time with Feeling…

Yet another ACA repeal effort has advanced through the House of Representatives, notwithstanding some rumblings of opposition from Heritage Action and their Congressional supporters. This effort has the best chance yet of making it to the President’s desk, though not of becoming law. The House bill avoided such tricky issues as taking away people’s health insurance tax credits or repealing the expanded federal financing for Medicaid, and instead focused on areas that would undermine the ACA in a more indirect effect on the law, such as repealing the Individual Responsibility Requirement (a.k.a. the “individual mandate”).

Prospects in the Senate are uncertain, since several senators have indicated they will not support a bill that does not include full repeal of the ACA. Ironically, a ruling by the Senate Parliamentarian that a provision of the House bill that defunds Planned Parenthood violates Senate budget rules could actually help the legislation move forward in the Senate, since several Republican senators who are up for reelection in 2016 and are running in states that trend blue/purple may be reluctant to cast a vote that will be perceived by many as a vote against women’s health care.

Even if a repeal bill does clear the Senate, it faces a certain veto and neither branch of Congress has the votes for an override. One might think that with all of the pressing business in front of Congress (avoiding a government shut-down, avoiding a debt default, keeping the country’s infrastructure from falling into even greater disrepair) that there would be little time for purely symbolic exercises. Sadly, it seems that Congress is completely hostage to a small group of far-right members who seem entirely too willing to risk economic chaos in pursuit of their radical agenda.

Another One Bites the Dust

About one-third of the non-profit co-ops created by the ACA to compete with traditional insurers are closing their doors this year, forcing their enrollees to shop for a new plan. The failure of the co-ops demonstrates that although opponents of the ACA have failed to land a mortal blow in either Congress or the courts, it does not mean no damage has been done. Funding for the co-ops was reduced by Congress (and the timetable for loan repayments in the original statute may have been unrealistic). In addition, several failing plans have cited the shortfall in expected risk corridor payments as administering the final blow. 

The demise of a large percentage of the co-ops underscores the fact that the ACA marketplaces remain a work in progress with only two years of operation under their belts. Especially if several large insurance company mergers occur, it may be necessary to adopt additional regulatory rules to prevent monopolistic insurers and providers from collaborating to raise health care costs.

As with the search for solutions to high-priced prescription drugs, the problem is less that there are no answers and more that the answers that will work face virtually insurmountable opposition in Congress and pretty tough sledding in state legislatures. However, with rising costs being the public’s number one health care concern, we can expect the demand for more aggressive price regulation to only grow stronger over time.