Reducing Drug Costs

Congress recently passed HR3 – the Lower Drug Costs Now bill.

Here are 3 elements from this bill that will reduce drug costs for American’s:

  • The federal government would be allowed to negotiate drug prices for the 44 million Americans on Medicare. The federal government has been banned from negotiating drug prices since 2003. Lower drug prices negotiated would be available to commercial insurers.
  • Drug costs for folks on Medicare would be limited to $2000 per year.
  • Drug companies would be restricted from raising drug prices above the rate of inflation. The list price of 3,400 drugs increased in the first six months of 2019 by 17% in the USA. 

One good example of out of control drug prices in the USA is the cost of Insulin. Over 300 billion a year is spent on insulin in the USA per year. In the United States, insulin costs per patients have doubled from 2012 to 2016 going from $2864 to $5,075 per year well outpacing inflation. A vial of insulin in the USA today that costs $300 (10-day supply) without insurance costs $30 in Canada.

You would think the Senate would be eager to pass this legislation to reduce drug costs in the USA but you would be wrong. The reason given for opposition is that drug companies will reduce research on new drugs if unlimited profits are not allowed. 

Drug companies are major contributors to political campaigns which might be a better explanation of the opposition. Most drug companies spend more on advertisement than research. In 2018 drug companies spent 6.5 billion advertising and 27.5 million on lobbying. One out of every three dollars spent on drug research was paid for by taxpayers. 

The bill would redirect savings from drug costs into research to develop new drugs in an effort to address this concern. You can’t significantly reduce the cost of prescription drugs without reducing profits of big pharma. 

On the campaign trail candidate, President Trump promised to save hundreds of billions by standing up to the pharmaceutical industry by saying he would “negotiate like crazy” to bring down prescription drug prices. Now is his chance to act. 

I plan on encouraging our Senators Marsha Blackburn and Lamar Alexander to support this bill and President Trump’s campaign promise. If you want to see lower drug prices in the USA you might want to consider doing the same. 

— R. Jason Goodman

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