Released: October 09, 2019

Consumer Action takes a look at the crisis in drug prices

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There is general agreement among individuals and lawmakers that prescription drug prices are out of control. Few prescription drug users—insured or not—are exempt from the pain of paying for life-prolonging and life-saving medicines.

Consumer Action reached out to more than 100 community organizations around the country to learn about the impact of high prescription drug costs on the consumers they serve. More than three-quarters (77%) of the community advocates surveyed said their clients were forgoing necessary goods and services—primarily food—to pay for their prescriptions.

The results of the survey are highlighted in the latest issue of Consumer Action News (https://bit.ly/2AVD5yE), which also examines the barriers to making medicines more affordable, including:

• Monopoly pricing. Drugmakers have the sole right to sell their patented drugs for virtually any price for up to 20 years.
• Failure to negotiate. The federal government is prohibited from negotiating the price of prescription drugs on behalf of people enrolled in Medicare “Part D” drug plans, which has led to a rapid rise in Medicare drug spending. Lawmakers have introduced a variety of bills to allow the federal government to negotiate the prices Part D enrollees pay for drugs, but none have been signed into law.
• Pay-for-delay dealmaking. When patents expire, drugmakers often pay generic drug manufacturers to delay bringing lower-cost medicines to market so that they can continue to corner the market with their brand-name drugs.
• Patent abuse. By developing “novel” uses for patented drugs and seeking new or extended patents—often just minor tweaks to the original patent—drugmakers can extend their exclusive rights to sell a medicine and buy themselves an almost perpetual monopoly on the drug.
• Pharmacy benefit managers (PBMs). These little-known middlemen have enormous control over drug pricing, as well as the power to limit access to prescription drugs by refusing to include certain medicines in covered “formularies.”
• Mergers. Large companies grow larger and more powerful by merging with others—and most mergers are approved by regulators with only minimal conditions. Recent examples include the corporate marriages of drug manufacturers AbbVie and Allergan and health insurer Aetna with CVS (a chain pharmacy and pharmacy benefit manager), which reduce consumer options and inflate consumer costs.

Solutions

While there is no single solution to the prescription drug pricing crisis, there are a few proposals that could help.

• Allow government negotiation. Allow Medicare to directly negotiate prices with drug manufacturers.
• Require PBM transparency. Pharmacy benefit managers profit from drugmaker rebates without public accountability as to how much they earn. PBMs could be compelled to pass rebates on to health insurance plans, specifically to reduce the premiums consumers pay.
• Reduce patent abuse. Grant patent extensions only for true—new—drug innovations.
• Increase generic options. Ban pay-for-delay gamesmanship to hasten access to generic drugs when patents expire.
• Cap consumer costs. Lawmakers could place a ceiling on what insured individuals pay out-of-pocket for drugs.

Outrage over skyrocketing prescription drug prices has prompted Congress to pump out a slew of bills addressing the broken market. Consumer Action News reports on some pending bills, such as the Lower Drug Costs Now Act that would curb mounting drug costs and cap each Medicare Part D enrollee’s spending at $2,000 per year.

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Consumer Action’s drug pricing impact survey was conducted online via SurveyMonkey between Jan. 31 and April 5, 2019. The results of Consumer Action surveys may not be used for any commercial purpose.

Consumer Action has been a champion of underrepresented consumers nationwide since 1971. A non-profit 501(c)(3) organization, Consumer Action focuses on consumer education that empowers low- and moderate-income and limited-English-speaking consumers to financially prosper. It also advocates for consumers in the media and before lawmakers to advance consumer rights and promote industry-wide change.

By providing consumer education materials in multiple languages, a free national hotline, a comprehensive website (www.consumer-action.org) and annual surveys of financial and consumer services, Consumer Action helps consumers assert their rights in the marketplace and make financially savvy choices. Nearly 7,000 community and grassroots organizations benefit annually from its extensive outreach programs, training materials and support.