A few months ago, from the campaign trail, President-elect Donald Trump said, “We are not allowed to negotiate drug prices. Can you believe it?”
Unfortunately, I can. It’s one of the reasons that prescription drug prices are skyrocketing. It’s one of the reasons that the cost of EpiPen went up nearly 500% since 2009. There are more reasons to be sure, but not being able to negotiate is an important one.
So, outrage and disbelief are called for, yes. But not without clear, concrete action to back it up. As the new administration and new Congress get to work, we need to take on prescription drug price gouging. And the path forward is clear.
Competition is the best way to ensure prescription drugs are affordable. Where there’s a lack of competition — as we saw with Mylan Pharmaceutical’s virtual monopoly on EpiPen — price increases often follow. However, if we end practices that hurt competition, enforce laws that protect competition, eliminate barriers that constrain consumer choice and bargaining power, and find new ways to promote competition, we can ensure that Americans can get the medications they need at prices they can afford.
First, we must end practices that hurt competition. Some brand-name pharmaceuticals deny generic companies the brand-name samples they need to obtain approval to sell their product. Other companies pay their potential generic competitors to stop manufacturing their generic product, outrageous agreements commonly known as pay-for-delay deals. Sen. Chuck Grassley and I introduced legislation to crack down on these anti-competitive payoffs. The longer the waits for competition, the more consumers pay.
Second, we must vigorously enforce existing laws that protect competition. The EpiPen misclassification is one example. While controlling most of the market and making few changes to the drug, Mylan classified EpiPen as a “non-innovator, multiple source drug,” or generic drug through the Medicaid Drug Rebate Program. As a result, Mylan paid smaller rebates to states and the federal government for the drug, raking in even more profits at taxpayers’ expense. The Justice Department reached a settlement with Mylan over the misclassification, but we still need a nationwide investigation to figure out how far this problem goes.
Third, we must eliminate barriers that constrain consumer choice and bargaining power, which is what the president-elect was getting at when he said that “we are not allowed to negotiate drug prices.” Right now, the VA health system can negotiate drug prices with pharmaceutical companies, but the law bans Medicare from doing the same. That’s a bad deal for more than 40 million American seniors who participate in the Medicare Part D prescription drug program, and for the rest of us as well. If we allow Medicare to bargain directly with drug companies for price discounts, we can save taxpayers money. (Of course, to do this, we need Medicare to remain intact. But that’s another op-ed for another day.)
Finally, we need to find new ways to promote increased competition on a larger scale. We should look for ways to expedite generic drug approvals, particularly for products that have a long history of being safe and effective. But how about letting in competition from abroad?
Typically, when consumers face a dramatic price increase from one seller, they can turn to another. But, when it comes to prescription drugs, too often they can’t. Prescription drugs in Canada were on average 50% less than they were in this country in 2013. These are the same drugs with the same safety standards and the same dosages as those that are sold in the United States. Yet, under current law, American families can’t buy these cheaper alternatives. It doesn’t make sense. Bringing in drugs from Canada, as Sen. John McCain and I have requested, would increase competition and incentivize U.S. pharmaceutical companies to lower their prices.
And why not build on the existing powers of Health and Human Services secretaries to respond to major price increases in the same way they can respond to drug shortages: allow more competition from other countries to beat the price increase? If drug companies knew that exorbitant price increases would trigger more competition from abroad, they might think twice before raising prices in the first place. When competition increases, prices for consumers go down. It’s that simple.
We can’t just say the right thing on lowering the cost of prescription drugs, we have to do the right thing, too. The solutions are out there. The path forward is clear. We need to increase competition, expand consumer choices, and hold pharmaceutical companies accountable. Mr. President-elect, my fellow members of Congress, let’s make sure all Americans can afford the prescription drugs they need. Let’s get this done.