Pharma and insurance companies bicker over rising costs of drug prices.
The Senate Finance Committee recently took pharmaceutical execs to tasks over escalating drug prices. The pharmaceutical and insurance industries have engaged in a prolonged blamefest over rising prices. Pharmaceutical execs claim the insurance rebate system forces them to raise list prices. A report by the Health Care Cost Institute found that drug list prices have skyrocketed 28.9% between 2013 and 2017.
Pharma execs claim the problem exists with pharmacy benefit managers who have to power to negotiate deep discounts for volume guarantees. Drugmakers say they have no choice but to raise their list prices, and that net prices for health consumers have been relatively flat. However, list prices do affect consumers at the checkout counter, where consumers pay a percentage of list price.
The high list prices have put a strain on Medicare and Medicaid. The government estimates prescription prices to rise 60% between 2019 and 2027, which has potential to cripple a Medicare program that will see a rise in enrollment as baby boomers age in.
The President wants to do something about Medicare’s looming drug crisis. Aside from eliminating the rebate system, the most popular ideas being kicked around are cheapening patents, allowing Medicare and Medicaid to negotiate prices, encouraging more generics and requesting drugmakers to match prices offered in other countries. Matching foreign prices is one idea pharmaceutical companies vehemently oppose.