Before implementing new cost control measures to tackle high drug prices, President Donald Trump's administration and lawmakers should first work to update and improve existing drug price regulations, according to two drug policy leaders.
Sean Dickson, a senior manager at the nonprofit public health organization NASTAD, and Tim Horn, deputy executive director of HIV and HCV programs at the Treatment Action Group, share four proposals to revamp the current drug pricing system in HealthAffairs Blog.
1. Fix the formulas. Drug companies offer back-end rebates and inventive payments to payers and pharmacy benefit manufacturers, which government price reporting calculations do not take into account. The government could correct these drug pricing formulas to include privately negotiated discounts to help lower drug prices for Medicaid and the 340B drug plan, according to Mr. Dickson and Mr. Horn.
2. Enhance existing penalties. Mr. Dickson and Mr. Horn also propose strengthening existing penalties for drugmakers making excessive price hikes. To limit high costs on new drugs, the Trump administration should place caps on the average manufacturer price relative to average inflation-adjusted prices for drugs in the same class or used to treat the same illness, according to the report.
3. Pool purchasing power. The government could also establish a coordinated national Medicaid negotiating pool to achieve lower drug prices, while also continuing to allow states to negotiate on their own, said Mr. Dickson and Mr. Horn.
4. Pull back the curtain. To improve transparency around drugs costs, the government could modernize price reporting formulas and force drugmakers to reveal their drug development and production costs, among other financial information.
To view Mr. Dickson and Mr. Horn's full drug pricing report, click here.
More articles on supply chain:
Mexico border tax could lead to medical device shortages: 4 things to know
Mylan expands EpiPen recall to US
Setting lower list prices — a first for pharma?