What Makes Ensuring Access to Affordable Prescription Drugs the Hardest Problem in Health Policy?

What Makes Ensuring Access to Affordable Prescription Drugs the Hardest Problem in Health Policy?

By Michelle M. Mello. Full text here.

Prescription drug costs have risen to an unsustainable level in the United States, accounting for one out of every six dollars spent on health care and compromising many patients’ ability to afford the pharmaceutical therapies they need. Although there is broad, bipartisan agreement that policy action is required, several aspects of the problem make it unusually hard to solve. Drawing on a November 2017 report by a committee of the National Academies of Sciences, Engineering and Medicine, I discuss those problems, which are of three types: moral factors, market factors, and political factors.

One fundamental moral problem is that no consensus has emerged in the United States about how to grapple with the core tradeoff involved in the prescription drug market: affordability versus availability of innovative therapies. A second is that it is surprisingly difficult to identify appropriate ethical principles for evaluating drug companies’ practices relating to pricing and access. A final ethical challenge is that efforts to squeeze drug prices in the United States may have harmful spillover effects for lower-income countries by upsetting the existing price discrimination scheme in the global market.

Although numerous market failures and distortions contribute to high drug costs, I examine two in depth. First, lack of transparency about prices in the pharmaceutical supply chain makes it difficult to identify the most promising opportunities to reduce excessive rent-seeking by market actors. Second, serious problems of perverse incentives arise from a number of actions by industry and policy makers. These include pharmaceutical manufacturers’ patient coupon programs, direct-to-consumer advertising, prescription drug insurance benefit design, fragmentation of health care payers in the U.S. market, Medicare reimbursement rules, and arrangements through which pharmacy benefit managers are reimbursed.

Finally, two political factors have made the problem of prescription drug affordability especially vexing. One relates to political compromises that have hamstrung the federal government’s ability to act—most notably, the decisions to bar the Centers for Medicare and Medicaid Services from negotiating the price of prescription drugs in the Medicare Part D program and to sharply constrain the agency’s ability to take drug cost or cost-effectiveness into account when making coverage decisions for the Medicare program. The other is the current political environment, which is pervaded by an atmosphere of crisis and scandal. Instead of collaborative problem solving, this atmosphere has led to finger pointing, inspired a sense of victimization on the part of pharmaceutical companies, and contributes to companies’ unwillingness to share information about drug prices, discounts, and rebates. Collectively, these problems jeopardize policy makers’ ability to convert the current window of opportunity for action on prescription drug affordability into meaningful action.