Congress Needs To Act On Prescription Reform

By Lori Swanson

December 25th, 2016

(as published in the Duluth News Tribune)

One in 10 Americans is prescribed a medication that can't be afforded.  No wonder. Per-capita spending on prescription drugs in the United States ($858) is more than double the average of the next 19 industrialized nations ($400). Big Pharma claims that research and development is the source of this rocket bum, but four of the 10 most popular drugs more than doubled in cost in the last five years. Wouldn't research costs already be baked into the 2011 price?

In 2009, Humira, a drug to treat rheumatoid arthritis, cost $762 a dose. Today it's $1,728. An EpiPen two-pack, used for allergic reactions, went from $100 in 2009 to more than $600 this year. Lipitor, a statin for high cholesterol, costs $430 in the U.S. but about $37 in Britain.

The price hikes on generics aren't any better. Between 2013 and 2014, generic versions of the asthma drug albuterol sulfate went from $11 to $434, the antibiotic doxycycline hyclate jumped  from $20 to $1,849, and the blood pressure medication isoproterenol went from $44 a dose to $1,200 a dose.

The uninsured often get charged the "sticker" (list) price for medications, a price not paid by insurers that negotiate discounts and rebates that save more than $100 billion per year. On some drugs, these discounts can be up to 80 percent. Uninsured patients who lack the market clout to negotiate get charged full price. One study found they pay 60 percent more on average than the federal government for prescriptions. They also are the most likely to go without prescriptions due to cost.

Patients with health insurance used to be one step removed from the high cost of drugs. Not anymore. The Centers for Disease Control estimates that 40 percent of people with health insurance are now in high-deductible plans -where insurance doesn't pay until a high deductible is met. Every drug company contacted by Bloomberg News in October said that when patients in high-deductible plans pay for drugs out of pocket, drug companies pay the rebates to the insurer or pharmacy benefit manager, not the patient. In other words, high-deductible plans don't give the benefit of rebates negotiated by insurers.

While real reform requires Congress to act, there are steps the state of Minnesota can take in the upcoming legislative session to help people pinched by high drug costs.

One model that doesn't cost taxpayers money or require a new government infrastructure already exists. The states of Oregon and Washington allow residents to benefit from discounts and rebates negotiated by government purchasers. The discount programs are open to anyone, regardless of income. In Oregon, 295,000 people participate,  and 231,000 people participate in Washington.

Here's how it works: State and local governments currently join purchasing alliances to negotiate better prices for drugs for prisons, schools, state nursing homes, and other public facilities. The purchasing pools use their collective power to negotiate more competitive pharmaceutical prices than any single member could obtain. Oregon and Washington permit citizens to join these state purchasing pools. Oregon's drug discount program provides an average discount of 50 percent off list prices for brand­ name drugs and up to 80 percent for generics. In Washington, enrollees save on average about 60 percent off a drug's sticker price, or $43 per prescription.

The largest government purchasing pool is in our backyard. The Minnesota Multistate Contracting Alliance for Pharmacy, formed in 1985, combines the purchasing power of 5,000 separate facilities from 49 states and buys more than $1 billion a year in drugs.

Legislators might consider combining the frugal structure of the drug-discount programs of Oregon and Washington with the negotiating heft of a purchasing alliance to bring lower drug prices to underinsured and uninsured patients in Minnesota.

This could be just what the doctor ordered.