Klietmann: PBM reform could lead to lower drug prices
May 02, 2024
The price of prescription medications rose
in 2023, prompting concern and outrage from patients and politicians.
It’s certainly true that Americans pay more for their medicines
than those in many other countries. But it’s worth considering why that is to better
understand the trade-offs that come with lower drug prices.
The United States has pursued policies encouraging and rewarding
novel drug development. Other countries have done the opposite. They pay lower
prices because they artificially suppress them. But doing so comes at a cost —
namely, less research and development, fewer novel treatments and delayed drug
access.
Let’s look closer at drug development and access in the United
States versus Europe.
The United States outspends
Europe in drug research and development. European R&D expenditures have
shrunk by a quarter over the last two decades. The United States has conducted
almost 150,000 clinical trials since 2008 — more than Spain, Germany, France,
Italy, Belgium and the United Kingdom combined.
If you remove money from research and
development and conduct fewer clinical trials, you’ll be left with fewer drug
approvals and new treatments. It’s a simple equation.
It’s no surprise that the United States leads the world in drug
approvals. From 2007 to 2017, the Food and Drug Administration approved 20%
more drugs than the European Medicines Agency, Europe’s drug regulatory body.
But that’s only part of the story. Between 2010 and 2020, 86 oncology drugs won
approval from the FDA and the EMA. In 80 cases, FDA approval came first — 227
days sooner. If you ever face an advanced-stage cancer diagnosis and a new and
effective treatment might save you, would you like to start treatment now, or
would you prefer to wait seven or eight months?
Even after that delay, many European
healthcare systems save money by denying patients access to new medications,
sometimes for years.
Americans get more drugs, and we get them faster. Patients in
the United States get first access to more than half of new drugs, regardless
of where they were developed. Of 287 drugs launched globally from 2018 to 2022,
Americans had access to 74% by the fourth quarter of 2022. Germany was next
with 52%, Japan and the UK at 43%. These differences can be a matter of life
and death.
Development costs aside, an additional force
is running riot in the American prescription drug business, driving up prices:
the middlemen in the supply chain connecting drug makers to patients via
insurers and pharmacies. In theory, these middlemen — called “pharmacy benefit
managers” — negotiate lower prices from drug makers on behalf of insurers.
In fact, they rake in more than $300 billion annually, all of
which is reflected in drug costs. Put simply, middlemen are skimming profits
without contributing to the development and production of pharmaceuticals. This
is part of why identical drugs produced by American or European multinational
pharmaceutical corporations are often offered in pharmacies in Europe to
patients at prices 50% or lower than in the U.S.
Source: The Detroit News