ACP's prescription for rising drug costs

ACP has 4 concrete proposals to address rising prescription drug prices: regulating and negotiating prices, enhancing transparency, increasing competition, and considering value.


That Republican and Democratic voters disagree on just about everything isn't news; what is newsworthy is when voters across the political divide are able to agree.

The rise in prices for prescription drugs is the 1 health care issue that unites Democratic, Republican, and independent voters: Polls show that more than 7 out of 10 voters agree that we are paying too much for prescriptions and more than other countries pay. Members of Congress and the presidential candidates are beginning to take notice.

The American College of Physicians believes that there is an unprecedented opportunity to channel this broad and growing voter concern into concrete proposals to address rising prescription drug prices. In the College's view, it isn't helpful to frame the issue as a choice between more regulation and more competition—we need a judicious use of both. To this end, ACP published a new position paper in Annals of Internal Medicine on March 29, available online , providing a comprehensive assessment of the reasons behind rising drug costs and our recommendations on how to address the problem.

The College's recommendations fall into 4 areas: regulating and negotiating prices, enhancing transparency, increasing competition, and considering value.

  • Transparency. ACP supports transparency in the pricing, cost, and comparative value of all pharmaceutical products. We believe that pharmaceutical companies should be required to disclose actual material and production costs to regulators, as well as research and development costs contributing to a drug's pricing. We support rigorous price transparency standards for drugs developed from taxpayer-funded basic research and elimination of restrictions on using quality-adjusted life-years (QALYs) in research funded by the Patient-Centered Outcomes Research Institute (PCORI).
  • Regulation. We believe that any program that addresses the price of medications should prioritize patient safety and high-quality care and support continued investment and innovation for drugs that can advance medical care. Such efforts include federal proposals allowing for greater flexibility by Medicare and other publicly funded health programs that may influence prescription drug prices, including negotiation of volume discounts on prescription drug prices and pursuing prescription drug bulk purchasing agreements under the Medicare program; renewed consideration of legislative or regulatory measures to develop a process to reimport certain drugs manufactured in the United States; and policies or programs that increase competitors for brand-name and generic sole-source drugs.
  • Competition. ACP opposes extending market or data exclusivity periods beyond the current exclusivities granted to small-molecule, generic, orphan, and biologic drugs. ACP supports robust oversight and enforcement of restrictions on product hopping, evergreening, and pay-for-delay practices as a way to increase marketability and availability of competitor products. Drugs that gain FDA approval are granted varying exclusivity periods—5 years for chemical products, 7 years for orphan drugs, and 12 years for biologics—as statutory provisions if all necessary requirements are met. Since patent laws can allow for more flexibility than the marketing and data exclusivities given by the FDA, pharmaceutical companies may use loopholes within the system to extend the patent protection of a drug. Product hopping or evergreening, in which a pharmaceutical company producing a brand-name drug makes minor or modest changes that provide no therapeutic advantage to a drug's formulation in order to extend the life of the patent, extends the monopoly on the brand-name drug and keeps competitor drugs out of the market.
  • Value. ACP supports research into novel approaches that would further value-based decision making and encourages research into policies that would tie price to innovations and clinical value, including explicit consideration of the pricing, cost, value, and comparative effectiveness of prescription medications included in a health plan's benefit package.

The College isn't under any illusion that pharmaceutical manufacturers and their lobbyists will agree with our diagnoses and our prescribed treatments to cure the problems associated with excessive and unsustainable drug prices. They will continue to argue that drug prices make up a relatively small portion of total health care expenditures, that the pricing is reasonable because of the risks associated with developing new drugs and the research and development costs involved, and that any efforts to increase regulation or use the regulatory mechanisms of government to promote competition will stifle innovation that leads to the development of life-saving drugs.

Yet the College's call for policies to reduce the price of prescription drugs does not mean we are dismissive of their benefits. Drugs that have been developed by pharmaceutical manufacturers, although often stemming from research supported by public funds, have benefited billions of people, within the United States and worldwide. But we also can't ignore the reality that as new developments in the diagnosis and treatment of disease are discovered, Americans are using these drugs as part of their daily lives. Our paper notes that 7 out of 10 Americans are taking at least 1 prescription drug, and not all patients are able to absorb the out-of-pocket costs. Approximately 18% of retail prescription drugs were paid for out of pocket in 2012, and patients used various techniques to reduce costs, including not taking a medication as prescribed (7.8%), asking the doctor for a low-cost medication (15.1%), purchasing drugs from another country (1.6%), or using alternative therapies (4.2%).

Rather than denying that a problem exists and opposing efforts to address it, the pharmaceutical industry would be well advised to listen to the voters, who know they are paying too much, and to the physicians in this country who are speaking out for the patients by demanding policies to rein in prices that can put life-saving medications out of reach.