The drug price reforms that President Trump recently proposed are as potent as a placebo, but not as harmless.
Trump once blustered that drug firms were “getting away with murder,” but his real-life plan caused pharmaceutical stocks to surge as investors foresaw even higher prices and profits ahead. The president stepped away from his earlier promises to allow Medicare to negotiate prices, while vowing to fight for higher drug prices abroad — a gold mine for the industry that would do nothing to reduce drug prices at home.
With Fortune 500 drug firms raking in $67.7 billion in profits in 2016, more revenue is the last thing the industry deserves. But a failure to contain drug costs isn’t the only shortcoming of Trump’s proposal. The whole pharmaceutical system — from the way medicines are developed to how they are tested, regulated, promoted, priced and provided — is broken, bent to the interests of the pharmaceutical industry. It cries out for reform.
Enter the comprehensive reform proposal drafted by a group of U.S. and Canadian physicians and drug policy experts (led by me and Joel Lexchin of Toronto), published May 17 in the British Medical Journal. Our proposal outlines a pharmaceutical vision that, unlike Trump’s, would both reduce costs and improve health.
Bringing down the price of brand-name drugs isn’t brain surgery: High-income nations throughout the globe get prices roughly half of ours by relying on a central payer to use its leverage in negotiations with drug firms — an approach we estimate could save about $154 billion annually if implemented in the United States. Negotiations by Medicare, once supported by Trump, might produce a chunk of those savings.
But the problem is bigger than prices. A recent analyst’s report from Goldman Sachs illustrates the pitfalls of letting the profit motive determine research priorities. As reported by CNBC, the report asked a disturbing question: “Is curing patients a sustainable business model”? As the report noted, curing many patients of an infectious disease like hepatitis could stop transmission and eliminate new cases, causing profits to plummet. That firms would even ponder such factors may seem nefarious, but it’s the inevitable consequence of a profit-obsessed R&D agenda. One noxious side effect of that agenda is the proliferation of drugs that offer no advance over existing agents: The majority of new agents are “me-too” drugs — trivial modifications of older medications — whose sales are pumped up by aggressive advertising campaigns but do nothing to improve health.
The public — mostly through the National Institutes of Health — already contributes richly to the research that underlies basically all modern drugs. But once a breakthrough looks imminent, the research is often turned over to pharmaceutical firms to carry out the last stages of developing a drug and profiting from it. Why not go all the way, and set up a public program parallel to compete with the private firms in developing and testing new drugs, and keep those publicly developed drugs outside the patent system, as the economist Dean Baker and others have described? These new drugs could immediately be manufactured cheaply as generics. Research could be directed toward the drugs that are most needed, not the most profitable, while testing would be performed by scientists without conflicts of interest.
That kind of reform would save money (and give us better drugs) in the long run, but relief is needed now. While drug price negotiations — as Trump once recognized — can help, they may not always suffice. For instance, if only one drug is available to treat a particular disease, the firm that owns the patent holds all the cards in negotiations, and it can walk from the bargaining table. In those situations, we need additional tools to lower prices while ensuring that patients have access to all necessary medications.
So our working group endorsed “compulsory licensing,” or allowing government to greenlight the generic production of expensive branded medicines in cases of medical necessity. Public drug manufacturing (which already happens in Sweden) should also be an option, as a last resort to combat price gouging — and to deal with shortages that have left hospitals scrounging for basic essentials like IV fluids and post-op pain medications as commercial manufacturers have faltered.
But regardless of who funds drug development, we also need to raise the standards for evaluating and approving drugs, which neither this administration nor its predecessors have shown an interest in doing. In recent years, expedited drug development pathways and downgraded standards of evidence have left us in the dark about how well many new drugs work — or even if they really work at all. Rushing new drugs to market based on shoddy research serves the industry, not patients. A study of recently approved cancer drugs in JAMA Internal Medicine found a majority of these drugs won approval on the basis of “surrogate endpoints,” like imaging findings, that frequently don’t translate into better health. Disturbingly, on follow-up, more than half of the drugs were never shown to improve survival.
That problem won’t get better unless we upgrade the FDA’s standards for approving new drugs. Drugmakers should be required to prove that new medicines improve the length or quality of life over and above existing treatments. Industry funding of the FDA — which began in 1993 and appears to have led to an increase in the approval of unsafe drugs — should end, and the agency should be fully publicly funded.
Even if reforms like these bring us lower prices and higher quality drugs, it won’t mean much for patients who can’t access them. For the more than 28 million uninsured Americans, medicines are often entirely out of reach — a problem that would be exacerbated by Trump’s Obamacare repeal efforts. And even for those who are insured, drug co-pays and deductibles force difficult — and unnecessary — choices between filling prescriptions and paying for other necessities.
Fortunately, there’s a simple solution: universal single-payer coverage without drug co-pays or deductibles. It’s how things work in Wales, Scotland and Northern Ireland (where it has proved entirely financially feasible), and it’s the only way to ensure nobody has to make a decision between their money and their life.
Our proposals for reform are ambitious. But the deep-seated problems in our pharmaceutical system demand a vigorous response, not the paltry half-measures Trump has proposed. Lives are at stake.