How the presidential candidates plan to rein in pharma costs
Although Clinton and Trump are significantly divided on many issues, they do have some commonalities when it comes to reducing pharmaceutical costs. For instance, they both support having Medicare negotiate lower drug prices. “Medicare has a lot of market power because a high proportion of healthcare purchases are made by people aged 65 and older,” says Peter Hilsenrath, PhD, Joseph M. Long Chair in Healthcare Management and professor of economics, University of the Pacific, Stockton, California. “This could bring down the cost of prescription drugs.”
Such an initiative, however, would certainly have repercussions. “The pharmaceutical industry will claim that having Medicare negotiate drug prices will undermine research and development,” Hilsenrath says. He believes these claims may overstate the risk, however, because while large pharma firms manufacture and distribute drugs, they aren’t the actual powerhouses for research and development. Rather, a lot of this occurs at universities, for which the public is already spending a considerable amount, with funding from the National Institutes of Health and the National Science Foundation, says Hilsenrath. In addition, he says, smaller bio-tech firms—which are venture-capital funded, deliver much of the research in drug development.
But Joel W. Hay, PhD, professor of pharmaceutical economics and policy, Department of Health and Pharmaceutical Economics, School of Pharmacy, University of Southern California, Los Angeles, is already seeing the effects of lower monetary rewards for research and development. “There is only one antibiotic that can combat drug-resistant bacteria,” he says.
Hay views having Medicare negotiate better pharmaceutical costs as a problematic solution to reining in pharma costs because under the current law such a tactic isn’t permissible. “The president would have to get the law changed for the Medicare Part D program in order for this to be possible; it’s not clear if Congress would go along with this proposal,” he says. “If Republicans still hold the House, it’s unlikely that they would allow it.”
Despite her position, Hay thinks if Clinton is elected it will be difficult for her to negotiate lower drug prices or lower drug company profits. “The pharma industry has strong lobbyists on Capitol Hill. If they feel directly attacked, which they will if Clinton tries to negotiate drug prices, that will be a huge battle for her,” he says. “It’s the classic case of a special interest group with lots of power that will fight fiercely if attacked.” The pharmaceutical industry would fight just as hard against Trump, if he went after them, Hay says.
Hay foresees another problem with having the government negotiate lower drug prices directly. “It’s very likely that pharma companies would respond by no longer allowing rebates and discounts for drug prices,” he says. That would probably lead to the elimination of rebates to Medicaid recipients, public health clinics, and other charitable organizations, resulting in worse access to drugs for those who are poor, sick, and vulnerable who lack good health insurance.