Issue: Support policies that improve the pricing and transparency, and increase access, affordability, and availability of prescription drugs.
Why Action is Needed
The cost of prescription drugs continues to rise, affecting access to life-saving treatments for patients who are unable to afford higher prescription and out-of-pocket costs, higher co-pays and more tiered drug pricing. More than 131 million Americans use prescription drugs with many facing the difficult choice of filling their prescriptions or paying for necessities and resorting to cutting back or skipping doses of their medicines, which can lead to serious health complications.
As outlined in a 2019 ACP paper, the U.S. spends more on prescription drugs than other high-income countries, with average annual spending of $1,443 per capita on pharmaceutical drugs and $1,026 per capita on retail prescription drugs. A 2021 study by the Rand Corporation reported that prescription drug prices in the U.S. average 2.56 times those seen in 32 other Organization for Economic Cooperation and Development nations.
Pharmacy benefit managers (PBMs) administer prescription drugs for more than 266 million Americans in private and public health plans, making them the principal purchasers of prescription drugs in the United States. An ongoing challenge is the lack of transparency in PBMs, with the contracts negotiated between health plans and PBMs for fees and the share of a rebate that is retained by the PBM are kept confidential. Pharmaceutical companies claim that they increase prices to pay for the rebates demanded by PBMs, while PBMs dispute this.
In addition to rising prescription drug costs, drug shortages have been on the rise over the past several decades, leading to increased costs, additional labor efforts, and heightened safety concerns. Drug shortages are also hindering patient access and adversely affecting medication adherence, leading to increased hospitalization and mortality rates.
In 2016, ACP published Stemming the Escalating Cost of Prescription Drugs: A Position Paper of the American College of Physicians, containing recommendations to improve transparency, value, and competition for prescription drugs, with the goal of creating a sustainable and affordable prescription drug marketplace. In 2019, ACP published Policy Recommendations for Public Health Plans to Stem the Escalating Costs of Prescription Drugs: A Position Paper From the American College of Physicians to offer additional recommendations for stemming the escalating cost of prescription drugs involving PBMs, decreasing out-of-pocket costs for patients, enhancing the government's purchasing power and addressing existing policies that add costs to the health care system. ACP’s recommendations include:
- Modifying Medicare Part D low-income subsidy program cost-sharing and copayment structures to encourage the use of lower-cost generic or biosimilar drugs.
- Continuing requirements of the Inflation Reduction Act for Medicare Part D negotiation models that drive down the price of prescription drugs for beneficiaries.
- We also recommend that new policies should be implemented to prevent market manipulation, help lower-cost alternatives make it to the market faster, and ensure a robust and competitive market for generic and biosimilar drugs.
Call to Action
- Urge Congress to pass the Lower Costs, More Transparency Act, H.R. 5378, to promote price transparency among health care entities.
- Support the Drug Shortage Prevention Act of 2023, H.R. 3009/S. 2362, to require that manufacturers of over the counter and prescription drugs notify Food & Drug Administration when they are unlikely to meet demand.
- Support the Cutting Copays Act, H.R. 5386, to eliminate cost-sharing for generic drugs for LIS beneficiaries, helping to incentivize the use of generic drugs.
- Support the Increasing Access to Biosimilars Act of 2023, H.R. 1352, to encourage adoption of biosimilars in Medicare and improve biosimilar accessibility.
- Support the Lowering Drug Costs for American Families Act, H.R. 4895, to expand number of prescription drugs which Medicare can negotiate under the Inflation Reduction Act from 20 to 50 starting in 2029.