Three ways government drug pricing agencies fail patients

Government drug pricing boards put politics between doctors and their patients. Rather than addressing the root cause of affordability and availability problems, these bureaucratic proposals are likely to harm patients' access to treatment and jeopardize research and development (R&D) of new drugs. Despite misleading rhetoric, the reality is that government pricing boards:

1. Failure to address the root causes of access and affordability challenges.

More than half of every dollar spent on drugs goes to insurers, PBMs, and others in the supply chain, and three PBMs control 80% of the national market. These self-serving middlemen use abusive practices to increase their profits by deciding which drugs patients receive and how much they pay for them—consistently putting profits ahead of patients. These middlemen may even divert aid from manufacturers that was originally intended for patients as profits for themselves.

Concerns surrounding PBMs are growing – from investigations into anti-competitive behavior that illegally distorts the market to harming consumers and threatening the survival of independent pharmacies, according to a recent report by the U.S. Federal Trade Commission and an investigation by the U.S. House of Representatives Committee on Oversight and Accountability.

The conclusion: State drug pricing boards are not fixing this broken system, but are instead ignoring PBM and insurer practices that drive up costs and create barriers to access, such as prior authorization.

2. Hinder the research and development of vital medicines.

Federal pricing policies already impact research and development investments, increasing the likelihood that state bodies will do the same. In recent comments in the Wall Street Journal Charles River Laboratories International, a pharmaceutical company that provides drug development services, cited federal pricing policies in the Inflation Control Act as one of the reasons for its clients' cuts in research and development. This policy has not even been fully implemented yet and is already having an impact. This should be a massive warning sign to all state governments.

Bottom line: Americans rely on new-generation drugs for a wide range of illnesses and chronic conditions. Policies like government drug pricing boards that undermine drug development jeopardize access to future treatments and cures.

3. So far, no money has been saved for taxpayers or patients, but states and taxpayers have already spent millions on it.

States with existing price-setting panels have already spent millions of dollars establishing their panels without saving a dollar. In fact, these panels are designed to prioritize the state's fiscal year rather than implementing strategies that prioritize patient savings without compromising drug research and development.

The conclusion: Not only do state pricing committees cost states money, but taxpayers often have to foot the bill.

Worse still, PDAB members are pushing to set the prices of life-saving medicines themselves, despite not knowing the real-world impact of their decisions and the impact they have on patients' access to medicines.

At a meeting in Colorado earlier this summer, board members acknowledged that there were still many unanswered questions about the impact and feasibility of their work and that they themselves did not know what impact pricing would have on patients.

“…how our decision will lead to a net cost reduction for patients is, in my opinion, still an unknown for us…” – PDAB member Dr. Amy Guiterrez (56:30 – 56:39)

In addition, government drug pricing committees lack clear, transparent and consistent standards and procedures. They routinely rely on faulty data, rarely give the public (see page 2) sufficient time to comment that could influence their decisions, and are not always required to provide clarity about their conflicts of interest—or those of the advisers who shaped the committees—or about procedures for recusing committee members.

It is clear that state drug pricing boards could harm the patients they claim to serve. They needlessly jeopardize patient access to medicines, could hinder access to future innovative drugs, and allow state pricing boards to continue to rip off patients at the pharmacy counter. It is critical that these boards address the real causes of rising drug prices rather than pursue politically charged policies that harm rather than help.