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Congress should step up, allow changes to cut high drug prices

Anyone who’s been to a pharmacy recently knows that prescription drug prices are confusing. Some, mostly generics, are affordable, while others, are expensive.

There is often no logic to some drug prices. But there are efforts to change that.

Prescription drugs are 10 percent of total health care spending in the United States. During the health care reform debate and passage of the Affordable Care Act, we learned that Americans pay twice as much for health care, per capita, as people in other countries. This shocking fact was never addressed by ACA supporters — and ObamaCare has done little to reduce health care costs, despite some small pilot programs that could produce savings later.

The New York Times wrote this week in support of efforts to bring transparency to drug pricing. The editorial noted that a prescription for a medication that moderates heart beats can cost $200 when filled one month, then cost $2,000 when the patient returns to the pharmacy for a refill. The Times also pointed to high prices for drugs to treat illnesses such as multiple sclerosis, cancer and AIDS.

Several states, according to the Times, are debating legislation to require drug companies to justify prices by revealing their actual research and development costs, their marketing costs and the profits associated with a drug. The Times’ editorial noted that President Barack Obama wants Congress to allow Medicare to negotiate prices with drug companies — something that should have been happening for years.

Predictably, the pharmaceutical industry is fighting these efforts. The industry defeated a bill in Oregon and is working to stop similar legislation in California.

Back in 2006 when Medicare Part D was being crafted, the powerful pharmaceutical industry pressed its friends in Washington and led Congress to prohibit Medicare from negotiating for lower drug prices — something Medicaid and the Department of Veterans Affairs do, saving taxpayers billions.

Last spring, USAToday’s editorial page endorsed letting Medicare negotiate lower drug prices, pointing out that over 10 years the savings could be $116 billion. But those savings, like any savings targeted in health care spending, are profits for drug manufacturers and others. Those groups will spend a fortune lobbying members of Congress to protect those big profits. The newspaper disputed the industry’s claims of needing to cover high development costs, noting that in many cases the companies spend more marketing a drug than they did on basic research, developing the drug.

The drug companies argue that they need high prices to pay for research and development as well as the costly process of clinical trials and federal approval. That’s true, but it’s also true that Americans pay far more than people in other countries pay for the same drugs. Why should only Americans pay drug research and development costs? Why not spread those costs around the world? The answer appears to be because other countries negotiate lower drug prices while Congress prevents that process from happening here, at least with Medicare Part D.

One study noted dramatic price inflation, with a drug introduced in the 1990s at a yearly cost of $8,700 now costing $62,400.

One drug industry abuse is to delay the expiration of a drug’s patent protection, preventing price competition from generic versions sold at much lower prices. In some cases, the drug company makes very minor changes, yet wins federal approval for continued patent protection — and prevention of cheaper generic versions.

Another scandal in the drug industry is what’s called “pay to delay,” which is when a drug manufacturer pays off a potential competitor or generic drug maker to not bring out the cheaper version of the drug coming off patent protection. A report in California found evidence of 140 “pay for delay” deals and one legislative health care advocate said patients pay 10 times more than necessary for drugs that are artificially delayed from going generic.

A reasonable first step to address the high cost of drugs is for Congress to let Medicare negotiate drug prices. The next reasonable step would be to examine drug development costs, marketing costs, and prices paid in other countries — with the goal of giving U.S. taxpayers and patients a break, and relief from paying more for drugs while the rest of the world enjoys lower prices.

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