By Amanda Wong
The Price of Unaffordability
“18 million Americans can’t afford needed medications… and about 18 million Americans or 7% of U.S. adults, [said] they were recently unable to pay for at least one prescription medication for their household,” according to a new poll from Gallup and West Health [1]. Around the country, millions of Americans are struggling to pay for their life-saving prescription medications, illustrating the lack of affordability and accessibility in America’s healthcare system. This issue, while present everywhere, is exclusive to the U.S. when in comparison to other first-world countries. For example, Humira, a popular, injectable medication commonly used to treat arthritis and psoriasis, costs, on average, $822 in Switzerland [2]. In the United Kingdom, prescriptions for the same drug run about $1,362. In the United States, the exact same drug will cost, on average, $2,669 – more than 3x times the price in Switzerland [2].
Why are America’s drugs more expensive? What is responsible for this price disparity?
Humira is the same drug whether it is sold in the U.S. or Switzerland, but the difference lies in America’s pharmaceutical regulatory system that oversees the prices of these drugs. Until recently, the United States was different from many of its European counterparts in that it failed
“to regulate or negotiate the prices of new prescription drugs” when they were introduced into the market. This allowed drug manufacturers to set their own prices, but resulted in a multitude of problems for the average U.S. consumer, especially high copays that blocked people from affording their life saving medications and Americans spending more on prescription drugs than any other country, amounting to almost two to three more times for the exact same drugs [3]. This has also contributed to medical debt becoming a significant issue in the U.S., with overdue medical bills ballooning during the pandemic, and transforming medical debt into the largest source of debt collections [4]. Overall, the actions from predatory pharmaceutical companies setting exuberantly high prices for drugs has left millions of Americans, even those insured, unable to afford their medication due to the skyrocketing costs.
Negotiating for Accessibility and Affordability
In order to address this issue, Congress recently passed the Inflation Reduction Act of 2022, with a specific provision granting the Secretary of the Department of Health and Human Services (HSS) the power to negotiate prices for some of the most popular drugs covered under Medicare. This aimed to combat rising inflation and predatory pharmaceutical prices, as well as aid millions of Americans in their ability to afford their medications. Although the Inflation Reduction Act of 2022 is limited to negotiating a limited number of single-source, brand-name drugs without generic or biosimilar counterparts in 2026 and 2028, it is undeniably going to help aid Americans in their healthcare costs, especially those disproportionately impacted by high drug prices, such as impoverished and disadvantaged communities. This legislation also establishes an upper limit for the negotiated price, which is calculated in consideration of the manufacturer’s research and development costs, current units costs of production and distribution, as well as other market volume and sales data.2 By decreasing financial pressure on Part D premiums and out-of-pocket drug costs, drug negotiations between Medicare and pharmaceutical companies will increase accessibility and affordability for many people, strengthening the Medicare program for both current and future stakeholders.
Overall, the Inflation Reduction Act of 2022 will result in greater equity for the most vulnerable communities in our current healthcare environment. Drug negotiation will allow the government to negotiate the price of some essential drugs within the Medicare Program, resulting in cheaper prices for some of the most expensive single-sourced drugs. Rebates for drug price increases above inflation will discourage pharmaceutical companies from raising their drug prices faster than inflation, thereby preventing predatory pricing. Redesigns for Medicare Parts B and D will cap out-of-pocket costs, allowing beneficiaries to have significantly greater access and affordability to their life-saving drugs.
Potential Trade-Offs
Despite the Inflation Reduction Act aiming to alleviate Americans from high prescription drug prices, I expect multiple tradeoffs to occur in the pharmaceutical industry. In response to the impending ability to negotiate drug prices, I expect large pharmaceutical companies to lobby or sue the government in efforts to block the bill from being carried out, especially given that the negotiation provision doesn’t take effect for the next 4-6 years. Lowering drug profits may also temporarily decrease innovation within pharmaceutical companies, as it may become less lucrative to invest in R&D in the industry, which could negatively impact the healthcare industry. In spite of these potential trade-offs, I believe that the pharmaceutical industry will still be competitive and resistant against any long-term decreases in innovation resulting from
drug negotiations.
All in all, the drug negotiation provision of the Inflations Reduction Act will be successful in increasing the affordability, accessibility, and equity of pharmaceutical drugs for millions of Americans. As Americans, we need to vote for similar provisions in the future and advocate for equitable measures in our healthcare industry regulatory system.
Works Cited
- Picchi, A. (2021, September 22). 18 million Americans can’t afford needed medications, Gallup finds. CBS News. Retrieved April 23, 2023, from
https://www.cbsnews.com/news/prescription-drug-prices-afford-18-million-americans/ - Kliff, S. (2016, November 30). The true story of America’s sky-high prescription drug prices. Vox. Retrieved April 23, 2023, from
https://www.vox.com/science-and-health/2016/11/30/12945756/prescription-drug-prices-explained - “Options for CMS Drug Price Negotiations | Health Affairs.” Accessed.
https://www.healthaffairs.org/content/forefront/options-cms-drug-price-negotiations. - Kliff, Sarah, and Margot Sanger-katz. “Americans’ Medical Debts Are Bigger than Was Known, Totaling $140 Billion.” The New York Times. The New York Times, July 20, 2021. https://www.nytimes.com/2021/07/20/upshot/medical-debt-americans-medicaid.html.
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