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Are we finally ready to do something about Big Pharma’s price-gouging?

Thanks to a web of bad laws and loopholes, Americans are paying outrageous prices for medicines. Here’s how it happened – and how we can fix it.

From EpiPens and insulin to cancer medicines and hepatitis C treatments, patients and families across America are getting hammered by prescription drug corporations charging unfair and unaffordable prices.

If you’re following the news on what Republicans in Congress and President Trump have been up to with regards to dismantling Obamacare, you might think that the American people are just desperate to cut Medicaid and have healthcare taken away from working families.

You’d be wrong.

Outrageously high prescription drug prices are forcing Americans to choose between taking the medicines they need to lead healthy and productive lives and putting food on the table for their families. So it’s not surprising that polling shows that lowering drug costs is a top healthcare concern across the political spectrum.

The unconscionable six-fold price increase for EpiPen and Wall Street Pharma Bro Martin Shkreli jacking up the price of the lifesaving anti-parasitic drug Daraprim have grabbed the headlines, but that’s only the tip of the iceberg of drug corporations’ price-gouging of American consumers and taxpayers.

Prescription drug corporations have spent hundreds of millions, if not billions, of dollars on lobbying to get our drug pricing rules just the way they like them.

And it’s been money well spent.

U.S. spending on prescription drugs reached a staggering estimated $457 billion in 2015. This year it’s projected to exceed half a trillion dollars.

Prescription drug corporations rake in some of the highest profit margins of any industry, right alongside Big Tobacco and investment bankers. And industry executives go home with annual salaries of tens of millions of dollars while health programs ration treatment, keeping lifesaving drugs out of the hands of people who need them most.

Drug corporations setting Maserati-level prices for hepatitis C treatments like Harvoni, for example, means some Medicaid programs only pay when patients’ livers are already severely damaged: when Sarah Jackson’s doctor prescribed her Harvoni, she was denied treatment because Indiana Medicaid refused to pay for it.

Industry executives argue that reducing drug prices will hinder investment in medical research and development (R&D), but there’s no good evidence that R&D explains high prices.

In fact, Big Pharma spends more on marketing than on R&D, and they set prices to maximize revenues, not to cover costs, as shown by a Senate investigation into Gilead’s pricing of hepatitis C drugs.

You and I may see the suffering of our fellow human beings as a tragedy. Some pharma CEOs see it as an opportunity to profit.

So what are the real reasons behind prescription drug corporations’ price-gouging?

The short answer is that it’s because our rules let them do it.

Despite our government being the nation’s top buyer of prescription drugs, no U.S. government body has rules that can restrict the price that prescription drug corporations can set for a medicine, and rarely are there restrictions on how much a company can raise that price.

Medicare Part D — the program that covers prescription drugs for senior and disabled citizens — accounts for seven percent of global prescription drug spending, but there are explicit rules that prohibit the Department of Health and Human Services (HHS) from leveraging that immense bargaining power to negotiate better prices.

Our government also grants long monopoly periods to drug corporations through special marketing exclusivity rules at the Food and Drug Administration and through patents,
even when taxpayer money helped to develop their drugs.

We also let companies game the system by gaining even longer monopolies simply by making small tweaks to an old medicine, even when it doesn’t provide any additional therapeutic benefit.

“Okay,” you may be wondering, “but what can we do?”

To fix the problem of high drug prices, we need to address its root causes.

This begins with industry abuses of monopoly power. The government should use its existing authorities to allow generic competition to bring down prices when prescription drug corporations are abusing us with unfair and unaffordable prices.

And we shouldn’t let drug corporations get away with charging Americans more than other wealthy, industrialized countries, especially when lifesaving medicines have been developed through research supported by our tax dollars.

Congress should pass rules to stop drug companies from gaming the system to get longer monopolies just because of minor tweaks to old medicines, as well as other abusive practices that prevent and delay price-lowering competition.

Another key measure in bringing down drug prices is aggressive price negotiation with prescription drug corporations. Congress needs to pass rules to unbind HHS’s hands and allow it to negotiate Medicare’s drug prices directly with prescription drug companies to get lower prices. Doing so could save Medicare Part D up to $16 billion a year if the program secured the same discounted prices as Medicaid or the Veterans Health Administration, according to a study by Carleton University and Public Citizen.

But all of this is going to require grassroots pressure to let elected officials know that the status quo is not acceptable.

On March 29, Sens. Al Franken (D-Minn.), Elizabeth Warren (D-Mass.), Sherrod Brown (D-Ohio) and 13 other Senators introduced the Improving Access to Affordable Prescription Drugs Act (Affordable Meds Act), landmark legislation to rein in monopoly abuses and make medicines affordable.

But passing serious reform like the Affordable Meds Act will only be possible if the public demands it from our elected representatives. If we can change the rules by passing the sensible reforms in the Affordable Meds Act, we will be closer to an America where medicines are affordable for everyone who needs them.

Dr. Azza AbuDagga is a health services researcher at Public Citizen’s Health Research Group. Steven Knievel is an access to medicine advocate at Public Citizen's Access to Medicines Program.

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