POLS 1101
Nathan Combes
March 27,2018
Possible Laws Regarding the Financial Costs in Healthcare
Almost everybody knows that America's drug prices are increasing at a steady rate and
they are furious about it, but it seems there is nothing to stop it. Recently there have been stories
about insurance companies putting obstacles between consumers and less risky medications with
lower prices. Between 2006 and 2015, pharmaceutical and biotechnology sales revenue
increased from $534 billion to $775 billion. "Drug companies raise prices far exceeding inflation
because they can," said Scott Knoer, chief pharmacy officer at the Cleveland Clinic. "In the
absence of regulation and without consumer awareness--since consumers don't generally see the
price due to insurance--the sky is the limit." So what laws can be put in place to stop all of this?
In order to start lowering these drug prices, we must start regulating the corporations
behind the brand-name drugs. Approximately 48 percent of prescription products are available
only in a brand-name product. According to the National Conference of State Legislatures, the
FDA has an upcoming strategy that involves the states controlling the costs of prescription drugs
through preferred drug lists, extra manufacturer price rebates, multistate purchasing and
negotiations, and scientific studies on comparative effectiveness. State Medicaid programs will
save between 8 percent and 12 percent on all Medicaid drug purchases. This will lead to savings
to states nationwide an average $1.8 billion annually.
The FDA claims they are trying to fix the problem of brand-name drug manufacturers
blocking generic drug companies. This leads to another one of the FDA's effective strategies.
This strategy will lead to the use of generic prescription drugs and the use of discounts on brand-
name drugs. This will be done through state government-funded pharmaceutical purchasing
state-only programs and some private-market pharmaceutical purchasing. They believe this will
lead to consumers saving 30 to 80 percent on certain widely used medications.