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, Professor of Law at Georgetown University Law Center and co-author of Overcharged: Why Americans Pay Too Much for Healthcare, talks through some of the major points of the plan and how effective they could truly be in the long run.
Two important parts of the plan are 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 US Department of Health and Human Services, says branded drug companies must stop the “gamesmanship” that slows 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 a problem 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 US 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 drugs, although 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.
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