Taming Big Pharma profiteering is no snap, White House learns in dual defeats

drugcostsunreasonablekff2019-300x172It takes more than a lot of huffing and puffing to blow down the ever-rising high costs of prescription drugs, the Trump administration has found. Two defeats happened last week:  officials were forced to pull a plan to curb profit-making by drug industry middlemen, and a federal judge axed on First Amendment grounds a plan to muscle Big Pharma into including price information in its ubiquitous product ads.

These were key pillars of the president’s multi-part plan to address increasing drug costs, one of Americans’ most pressing concerns with their health care, and Trump had put considerable of his political capital behind them as he rolls toward the 2020 election campaign.

As the New York Times reported:

“Administration officials rushed to assure the public that the double setback did not reflect failure on one of the president’s signature issues, one that has fueled public outrage and drawn the attention of both parties. He has hinted that he is focusing in on a more audacious proposal, especially from a Republican president. It would tie some drug prices to those set by European governments, an idea that is tantamount to price controls and opposed by members of his own party. Yet Mr. Trump is said to be particularly taken with the idea because it fits with his ‘America First’ approach.”

The price-control pitch is neither simple nor is its path forward without its own obstacles. Further, the complexity of the market that Big Pharma has created for its wares has become its own political mine field, as Trump officials found, not only with the price-control plan but also with suggested policy changes affecting rebates and industry middlemen. Trump officials wanted to curb drug costs by first attacking middlemen costs in Medicare, targeting rebates in prescription medications.

The administration fast found itself in a furious war between drug makers and the middlemen, those who got launched in part by big employers and insurers fretting about rising prescription medication costs. They fostered the rise of prescription drug benefit managers, or PBMs, middle parties who negotiated with makers for discounts and rebates — while keeping their deals and information private and proprietary, while also pocketing what became sizable and increasing sums for their effort. If drug prices lacked transparency before PBMs, they became all the murkier and complex after.

When Alex Azar, the federal Health and Human Services Department secretary, and Trump tried to bleed the drug industry of PBM charges and profit-making, the firms fought back, battling at times Big Pharma makers. As the New York Times reported:

“Mr. Azar has been the leading champion of trying to eliminate rebates as a centerpiece of the administration’s plans to offer relief to consumers from rising drug costs. He was still promoting it as recently as June, to showcase how the market for drugs is broken. But fiscal conservatives at the White House had long balked at the potential cost, and others had worried about angering Medicare beneficiaries in an election year. Though it would have lowered out-of-pocket costs for older Americans with expensive drugs, the rule was expected to raise drug-plan premiums for all Medicare beneficiaries. In May, the nonpartisan Congressional Budget Office concluded that the rule, if adopted, would cost taxpayers $177 billion within 10 years. The initiative was intended to eliminate after-the-fact rebates that drug makers pay to the private companies that operate Medicare’s Part D drug plans, and instead required that any discounts be passed to consumers at the pharmacy counter. Medicare beneficiaries with high drug costs often pay close to the list price, or a percentage of it, during certain phases of their coverage. They were required to do so even though, in many cases, the companies operating the plans were collecting rebates on the same drug. The rule had been opposed by the insurers and pharmacy benefit managers, who contended that they wielded the rebates to pressure drug companies to keep prices low and used the savings to keep Medicare premiums low. But the drug industry has been campaigning for years that it is unfair for insurers to keep the rebates when consumers are paying the list price through high deductibles.”

Got all that? It’s an illustration of how Big Pharma and others have made drug markets complicated enough to make most heads spin — and changes and “reforms” difficult to push through.

As for the administration’s plan to make Big Pharma give its “list prices” for drugs it hawks through ads, it was easy to see as an idea doomed almost from the start. It got slapped down fast on free speech grounds — yes, the U.S. Supreme Court accords corporations First Amendment rights — and looked to critics as both a government over-reach and unworkable. For consumers, most of all, would knowing a drug’s list price matter, since that likely wouldn’t be what they would pay for it, depending on their insurance, rebates, and more? Was this proposal little more than political theater?

In my practice, I see not only the harms that patients suffer while seeking medical services, but also their struggles to access and afford safe, efficient, and excellent medical care. This has become a big challenge due to the soaring cost, complexity, and uncertainty of treatments and prescription medications, too many of which prove to be dangerous drugs.

For all Americans, the anger and frustration about Big Pharma price gouging is hitting extremes, especially as patients suffer and even die due to drug maker profiteering on medications like insulin. So, it’s not partisan schadenfreude to see the administration efforts to rein in drug costs flounder. It, instead, is infuriating to see, as a former commissioner of the federal Food and Drug Administration has noted, that:

“Even in the complicated ecosystem of drug pricing, one fact stands out: $166 billion in discounts from pharmaceutical companies go directly into the coffers of pharmacy benefit managers. That’s 37% of our nation’s entire expense on drugs. Not a single dollar of that largesse is used to reduce patients’ out-of-pocket costs when they need medicines. So when the White House … developed a rule to change the dynamic by banning many rebates drug companies pay to pharmacy benefit managers under Medicare, policy experts applauded. That proposed rule died … the victim of intense lobbying and general ignorance. Who loses? Patients. Who wins? The status quo.”

It may be that the president may wish to do far less boasting and talking with little sense about his administration’s health care efforts — and buckle down to work in far improved fashion with Congress, and especially with his political opposition, to deal with a major voter concern.

There are workable approaches to assisting patients with onerous drug costs, including software that is gaining traction among insurers and doctors, allowing care givers to check prices on prescribed medications to help advise consumers about costs.

We’ve got a lot of work to do to deal with unacceptable exploitation of consumers by Big Pharma and its many allies.

Patrick Malone & Associates, P.C. listed in Best Lawyers Rated by Super Lawyers Patrick A. Malone
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