Drug prices have risen under the last two governments – but not for everyone and not enough

When it comes to drug pricing, the Trump and Biden/Harris administrations each have very modest victories.

As Director of the Health Outcomes, Policy and Evidence Synthesis Group at the University of Connecticut School of Pharmacy, I teach and study on the ethics of prescription drug pricing and the complexities of drug pricing nationally.

If you look at the successes of presidential candidates on a range of drug pricing policies, you will see that progress continues across administrations. However, neither the Trump administration nor the Biden-Harris administration have done anything to truly lower drug prices for the majority of Americans.

$35 insulin

Insulin is a necessity for patients with diabetes. But from January 2014 to April 2019, the average price per unit rose from $0.22 to $0.34, before falling slightly to $0.29 per unit by July 2023. Since dosage is weight-based, the cost of insulin for someone weighing 70 kilograms would have increased from $231 to $357 per month from 2014 to 2019 and decreased to $305 per month by 2023. Price increases have led some patients to stop taking their medications by taking less than the dose they need for good blood sugar control. One study estimated that over 25% of patients in an urban diabetes center were underusing insulin.

In July 2020, the Trump administration issued an executive order capping insulin copays at $35. In fact, it resulted in participating Medicare Part D programs capping the price of just one insulin product of each type at $35. For example, if six short-acting insulin products were on an insurer's list of approved medications, the insurer was required to offer an ampoule form and a pen form at a price of $35.

These price changes did not take effect during Trump's presidency. As of 2022, only about 800,000 people — or about 11% of the more than 7.4 million people in the U.S. who use insulin to regulate their blood sugar — experienced a price reduction.

In August 2022, the Biden-Harris administration signed the Inflation Reduction Act into law. This maintained the $35 insulin cap with the same provisions, but made the program mandatory for all Medicare Part D and Medicare Part B enrollees. This increased the number of people who could benefit from cheaper insulin to 3.3 million.

This still doesn't help most diabetics. If you do not have Medicare, the $35 discount does not apply to you. Additionally, under these policies, pharmaceutical companies are not responsible for lowering insulin costs, but health insurance companies are forced to lower co-payments. The costs could be passed on to beneficiaries in future Medicare premiums.

Importing Canadian medicines

Americans pay nearly 2.6 times more for prescription drugs than people in other high-income countries. One way regulators are trying to lower prices is to simply import drugs at the prices charged by drug companies in those countries, rather than those charged to U.S. consumers.

In July 2019, the Trump administration proposed importing drugs from Canada to share Canadians' lower drug costs with American consumers. He signed an executive order allowing the Food and Drug Administration to set the rules under which states can import the drugs. When President Joe Biden took office, he left the executive order in effect and the rulemaking process continued.

Under the Trump or Biden-Harris administrations, no state has been able to successfully import a Canadian drug. However, in January 2024, the Food and Drug Administration approved Florida's plan to import Canadian drugs, becoming the first state to get the green light. Colorado, New Hampshire, New Mexico and Texas have applications pending as of September 2024.

Unfortunately, it is unlikely that Canada would allow its prescription drugs to be shipped in large quantities to American consumers, not without imposing high tariffs as a deterrent. This is because drug manufacturers could limit their shipments to Canada and cause shortages if drugs are moved to the United States. Additionally, manufacturers may be less willing to negotiate lower prices for Canadians if doing so would hurt U.S. profits.

Negotiations with the pharmaceutical industry

Whether it's prescription drugs or cars: for a successful sale, buyers and sellers must agree on a price. If the potential buyer isn't willing to give up negotiations, you won't get the seller's best price. One reason drug prices are higher in the United States than in other countries is that the government is not a skilled negotiator.

Negotiations that result in significant drug price reductions are often due to the drug manufacturer losing access to patients with a particular health plan or moving to a higher drug tier, which significantly increases a patient's copay. However, if the buyer rejects the seller's final offer, its members or citizens lose access to these drugs. While large private health insurers and pharmacy benefit managers are able to negotiate drug prices directly with pharmaceutical manufacturers, often at significant savings, until recently federal law prevented Medicare from doing so.

In May 2018, the Trump administration released a so-called prescription drug price reduction plan that included negotiating Medicare prescription drug prices with the pharmaceutical industry. This plan was not implemented during his term in office.

In August 2022, the Inflation Reduction Act under the Biden-Harris administration enabled price negotiations and specified how many drugs could be negotiated in a year.

The first negotiations between Medicare and the pharmaceutical industry took place in the summer of 2024 and reduced the costs of ten Medicare Part D drugs, including the blood thinner Xarelto and the drugs Farxiga and Jardiance, which treat type 2 diabetes, heart failure and kidney disease. The resulting $1.5 billion in savings will be extended in 2026 to the approximately 8.8 million Medicare Part D patients taking these drugs. Prices for these drugs are still twice as high as in four other industrialized countries.

In 2027, prices for an additional 15 Medicare Part D drugs will be negotiated. After that, drug negotiations could include Medicare Part D drugs that you pick up at your pharmacy and Medicare Part B drugs that are administered or received at your doctor's office.

Another aspect of the Inflation Reduction Act is the cap on out-of-pocket expenses at $2,000. However, this will not come into force until 2025 and will simply pass on the costs above the cap to taxpayers.

Continued progress

When assessing complex issues such as drug pricing, it is often difficult to attribute policy successes to one government over another. There were ideas that were initiated during the Trump administration but didn't come to fruition until the Biden-Harris administration implemented and expanded on them.

For example, Medicare price negotiations, proposed in a Trump administration “blueprint,” were codified into law by President Biden, but the fruits of this policy will not be seen until the next administration. And regardless of who you attribute this success to, only a subset of Medicare recipients will see relief from high drug prices.

To actually reduce prescription drug costs, it would be necessary to determine the maximum price the country is willing to pay for services such as: B. the cost per quality-adjusted life year at the federal, state and private payer levels, and the willingness to withdraw from negotiations if necessary. The price exceeds this level. However, this would not be a panacea, particularly for patients with rare and ultra-rare diseases, and would need to be relaxed over time to avoid industry bankruptcy.

Originally published in The Conversation.