The U.S. must take urgent steps to rein in the out-of-control cost of prescription drugs, including aggressive government intervention to negotiate lower prices for American patients, a panel of the National Academies of Sciences, Engineering, and Medicine recommended Thursday in a sweeping new report on pharmaceutical pricing.
The report — titled “Making Medicines Affordable: A National Imperative” — includes a strongly worded indictment of the nation’s prescription drug market, which it warns is failing millions of sick patients.
And the 201-page report takes aim at several of the pharmaceutical industry’s cherished practices, including direct-to-consumer marketing and efforts by drugmakers to block and delay the introduction of lower-priced generic medicines.
“Simply stated, the current system is not sustainable,” concluded the panel’s chairman, Norman Augustine, former chief executive of Lockheed Martin Corp., one of the world’s largest defense companies.
“Consumer access to effective and affordable medicines is an imperative for public health, social equity and economic development, and … this imperative is not being adequately served by the biopharmaceutical enterprise as it functions today.”
The report’s authors, including a mix of academics, current and former healthcare executives and government health officials, praised the many advances that drugmakers have made in helping to treat patients with complex diseases.
But they noted: “There is little value in new drugs that patients cannot afford.”
While the share of Americans reporting they are delaying care because of cost has declined since passage of the 2010 Affordable Care Act, nearly 1 in 5 reported that they did not fill a prescription because of cost in a recent national survey by the Commonwealth Fund.
Among the steps recommended by the panel to bring down costs are:
More aggressive action by federal regulators to curtail drugmakers’ practices of delaying the availability of generic and biosimilar drugs;
Use of the federal government’s purchasing power to directly negotiate lower drug prices for patients on government programs such as Medicare;
More required public reporting by drugmakers, insurers and others of how medicines are priced;
New efforts to determine the “value” of drugs by assessing how well they work relative to how much they cost;
Less direct-to-consumer advertising by drugmakers;
New limits on how much patients must pay out of pocket for drugs.
The report comes amid growing public anxiety about drug prices, an issue that has topped Americans’ healthcare concerns in many recent polls.
President Trump has repeatedly promised action, and this week, Trump’s nominee to take over the Department of Health and Human Services, Alex Azar, told a Senate panel that he would make drug prices a top priority.
To date, however, the Trump administration has not taken any meaningful steps to address the affordability crisis.
And many patient and consumer advocates are skeptical that Azar, who served as a top executive at Eli Lilly & Co. at a time when the drug giant dramatically raised prices on insulin, will challenge the pharmaceutical industry.
The highly profitable industry, which spends millions on lobbying and political giving in Washington, for years has fought back proposals in Congress to increase pharmaceutical regulation.
The new report drew praise Wednesday from several medical and consumer advocacy groups, including the American Society of Clinical Oncology and Patients for Affordable Drugs.
“A lot of the solutions proposed today would meaningfully lower drug prices,” said Ben Wakana, executive director of the patient group. “Now the responsibility turns to Congress and state legislatures to implement these changes. The reason 6 in 10 Americans say lowering the cost of prescription drugs is a ‘top priority’ for President Trump and Congress is because the monopoly pricing power of drug corporations has gone unchecked for too long.”
The drug industry’s main lobbying group — the Pharmaceutical Research and Manufacturers of America, or PhRMA — derided the report’s recommendations, calling them “a rehash of outdated ideas that would undermine the competitive market that is holding medicine cost growth to the slowest rate in years.”
PhRMA’s criticism was echoed by two former drug executives on the panel who dissented from the report’s recommendations.
“Several of the report’s recommended actions would produce a decline in research and development investments, ultimately leading to increases in healthcare costs,” warned Henri Termeer, former CEO of Genzyme Corp., and Michael Rosenblatt, former chief medical officer at Merck & Co.
Termeer and Rosenblatt singled out for criticism proposals to allow government programs to negotiate lower prices, to allow the importation of lower-priced medicine from abroad and to limit direct-to-consumer advertising.
By contrast, seven of the panel’s 17 members added a minority report calling for even more aggressive steps to rein in prices.
“We need a more comprehensive approach,” the group of seven noted, recommending tougher transparency requirements on drugmakers and insurers, and more immediate use of existing tools to assess medicines and determine whether they are worth the price.