High prescription drug costs are a problem that most Americans deal with. In response to this, President Donald Trump announced last month that his administration is introducing a 50-point plan to cut drug prices. Dr. David Hyman, a Professor at Georgetown University Law Center and co-author of Overcharged: Why Americans Pay Too Much for Healthcare, talks through some of the plan’s major points and asks how effective they will truly be in the long run.
The plan centers around an attempt to ease the entry of generic drugs into the market and to make their prices more flexible. Eric Hargan, Deputy Secretary of the U.S. Department of Health and Human Services (HHS), says branded drug companies must stop their “gamesmanship”– tactics used to slow the creation of a competitive, free market for drugs. And, getting more drugs into “part D” allows Medicare to negotiate for lower prices through pharmaceutical benefit managers (PBMs).
But, the PBMs bring issues of their own into the industry. President Trump says that these middlemen have been part of the problem by stopping the distribution of rebates and discounts to consumers and pocketing the money themselves, which also leads to artificially high list prices for drugs. Dr. Hyman says that PBMs are still important to the industry, because they structure the pharmaceutical market, but the plan will hopefully help to create a fairer market.
Another potentially influential part of the plan, announced by Alex Azar, Secretary of the U.S. Department of Health and Human Services, will be to require drug companies to announce the list prices of drugs in their advertisements in the interest of transparency.
In his book, Dr. Hyman introduces several points that he believes would be beneficial in helping Americans pay less for drug. But these points are not in President Trump’s recent plan. He suggests that allowing Americans to import generic drugs from foreign markets would help solve the generic drug price hikes. Dr. Hyman also stressed that high insurance costs are the biggest driver of high costs for prescription drugs.
For more information about the plan to lower drug prices and the guests featured in this segment, visit the links below.