This week President Trump will unveil his plan to help bring down the cost of prescription drugs, helping fulfill his 2016 campaign promise.We have a “wish list” of three reforms the President can adopt that will immediately help consumers.
Look at all the players in the drug supply chain
Consumers often aren’t aware, but the drugs that they buy at the pharmacy have had to move through a complicated supply chain that includes the manufacturer, the insurance company and the often-overlooked pharmacy benefit manager (PBM). We’ve written about PBMs before, but these “middlemen” are responsible for establishing formulary lists and setting prices for prescription drugs, affecting not only what medications are available, but also how much a patient pays.
Through the power of these formularies, PBMs negotiate with manufacturers to maximize rebates or other discounts for prescription drugs, with the goal of passing on these savings to consumers. However, PBMs use accounting gimmicks and to keep these savings for themselves, sticking consumers with higher prices.
PBMs are rarely scrutinized, meaning that they can easily get away with these tactics and consumers will not be any the wiser.The Trump Administration can put the spotlight on PBMs and their practices, increasing transparency throughout the whole drug supply chain to ensure that discounts and savings actually GET to patients, instead of lining earnings reports.
Increase transparency around hospital pricing
Hospitalization is never a good experience even under the best circumstances. But, to add insult to injury, patients are often unaware that their hospital fees are often arbitrary, or unconnected to the actual cost of administering care or the cost of supplies. Emergencies don’t typically allow for comparison shopping, a situation that allows hospitals to take advantage of patients.
It’s no wonder that a report published last month found that hospital prices drove the increase in healthcare prices throughout the entire industry. And, hospital prices are still increasing with no end in sight and, as the USA Today Editorial Board pointed out just this week, “Hospitals…are determined to keep things the way they are. To them, a powerless consumer and an opaque system is key to maintaining leverage.”
Thankfully the President has already taken steps to help correct this.The Centers for Medicare and Medicaid Services (CMS)are pushing much greater price transparency by requiring hospitals receiving Medicare funds to post their prices online. Now it’s time for the president to build on these actions, further increase transparency around hospital prices to help create accountability in our healthcare system and bring down costs.
Loosen the ACA’s regulatory stranglehold
The Affordable Care Act’s regulations have hurt businesses and consumers alike, forcing consumers to pay unaffordable premiums or face steep fines and forcing businesses to navigate expensive and complicated regulations. Though the President has already taken measures to increase exemptions and choice for consumers to escape from the ACA’s worst provisions, more needs to be down.
In 2019, insurers will again seek double digit premium increases, some in Maryland as high as 30 percent. Consumers just can’t afford these increases.
President Trump must take further steps to ensure that patients are not stuck paying for healthcare because of the actions of unelected DC bureaucrats. Increasing choice for patients and helping states to foster innovative solutions that fit their populations’ needs are vital to this effort.
