When Your Medication Costs More Than Your Mortgage

January 22, 2018

By Marilyn Tavenner, President and CEO of America’s Health Insurance Plans, and Rick Pollack, President and CEO of the American Hospital Association.

This piece originally appeared on The Hill

Prescription drug prices are out of control: The average annual cost for one specialty medication to treat a chronic condition is now more than what most families earn in a year. Big Pharma could solve the problem by committing to more rational and sustainable pricing models.

Instead, for the last year, Big Pharma has chosen to point the finger at everyone else, and their decision to engage in a blame game is a tacit admission that drug prices are, in fact, too high. Since this is the road they’ve chosen to go down, let’s lay out some facts about the root causes of outrageous drug prices.

It is a fact that pharmaceutical companies develop life-saving medications and breakthrough cures. New therapies and technologies treat and cure disease every day. That’s why hospitals use, and health plans cover, these breakthroughs—because they save lives and help patients.

It is also a fact that pharmaceutical companies control the price of drugs. They alone set the launch and list price of those life-saving medications and breakthrough cures.

Consumers rightly ask, “Why is the cost of my health insurance going up?” Rising drug prices are a big reason why.

Here’s another fact: Nobody aside from pharmaceutical companies benefit from out-of-control drug prices, and that is why hospitals and insurance companies work hard on behalf of patients and consumers to negotiate lower prices. But when a pharmaceutical company’s starting price for a necessary treatment is $100,000, negotiations can only do so much good.

Patients see the result of those outrageous drug prices reflected in the price they pay at the pharmacy, the bill they get from a hospital visit, and the premium they pay for health insurance. As a result, too many families are forced to make an impossible choice between paying for their child’s prescription and paying their mortgages.

This crisis is exacerbated by pharma exploiting a broken system for financial gain. Whether it’s creating a fortress of questionable patents to prevent generics from coming to market, or even transferring a drug patent to an American Indian tribe to maintain a monopoly on a common eye treatment, there are few lengths to which Big Pharma will not go in order to prop up drug prices.

Big Pharma would have us to believe that there is a binary choice between affordability and innovation. Like the Executive Chairman of Gilead Sciences who recently said that drug makers need big profits so they can “continue to innovate.” But that logic doesn’t add up: In 2016, 100 percent of Gilead’s profits were used for share buybacks and shareholder dividends, rather than research and development.

The fact is, nine of the 10 leading pharmaceutical companies spend more on sales, advertising, marketing, and lobbying than they do on research and innovation.

Industry trade group PhRMA has taken a page from the book of its members—spending millions of dollars on an advertising campaign in which they blame hospitals, insurance providers, and others for the rising price of prescription drugs. Dollars they could use bring down the costs of their medications and make a real difference in the cost of care for patients.

PhRMA’s campaign slogan is “Let’s Talk About Cost.” Great idea. We welcome the discussion.

But instead of talk that passes the buck on drug pricing, screams about the supply chain, and blames anyone but themselves, let’s talk about how we can work together on real solutions that truly balance affordable access with world-class innovation.

What do those solutions look like? For starters, break down barriers to more competition, speed generics and biosimilars to the marketplace, and expand programs to pay for drugs when they work—not when they don’t. These kinds of solutions would create more collaboration and less aggressive negotiations—and more focus on patients and less focus on profits.

Working together we could deliver better access for patients, lower prices for consumers, and a sustainable future for everyone.

America’s Health Insurance Plans (AHIP) is the national association whose members provide coverage for health care and related services. Through these offerings, we improve and protect the health and financial security of consumers, families, businesses, communities and the nation. We are committed to market-based solutions and public-private partnerships that improve affordability, value, access, and well-being for consumers.

Action Needed

Tell your representative to say "no" to higher drug costs

We’ve told you about big Pharma’s brazen attempt to gut the last remaining protection for patients against runaway drug prices.

Now the most profitable industry in the world is quietly pushing a bill through the state legislature that would cripple pharmacy benefit managers (PBMs), which negotiate lower drug costs for North Carolinians.

We cannot let big pharma use the law to eliminate our only advocate in price negotiations.

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