U.S. should control price of medicines
Of course it should never have taken more than three years and the threat of a lawsuit for the FDA to approve Florida Gov. Ron DeSantis’ plan to import prescription drugs in bulk from Canada.
The delay likely owed to the pharmaceutical industry’s implacable opposition to anything that would curb its profits, rather than to any foot-dragging by President Joe Biden, whose executive order 2 1/2 years ago instructed the agency to cooperate with Florida and like-minded states.
Instead of a deserved “thank you,” DeSantis and Florida’s hyperpartisan attorney general, Ashley Moody, announced the welcome news with a spiteful swipe at “Biden and his heavy-handed bureaucrats.” If they have any evidence that the president was false to his own promise, let’s hear it. None was offered.
It is true, to be sure, that every government bureaucracy is beset to varying degrees by well-paid, well-staffed lobbies for whom the passage of a law or regulation that they oppose is not the end but only the end of the beginning.
Big Pharma alone spent $378 million on lobbying in 2022, according to Open Secrets. Its lobby, PhRMA, called the approval “reckless” and said it is considering “all options” to thwart it. That surely means more lawsuits.
Moreover, the unwritten rule in any bureaucracy is that the safest answer is usually “no.” That prevails regardless of which political party is in power.
The FDA’s belated approval comes with informational and safety requirements that Florida should not have too much trouble fulfilling.
The question, rather, is what might happen in Canada to thwart the savings, as much as $150 million a year, that Florida hopes to gain by purchasing cheaper drugs in Canada for Medicaid, its prison hospitals and programs run by the Department of Children and Families. (Individual consumers are already able to order prescriptions from Canada.)
Canada, whose entire population of 38.9 million is only 71% larger than Florida’s, is concerned that sizeable purchases by Florida might lead to shortages and higher prices there.
As reported by The New York Times, “Some drug manufacturers have agreements with Canadian wholesalers not to export their medicines, and the government has already taken steps to block the export of prescription drugs that are in short supply.”
In 2020, the Canadian government adopted an order prohibiting the export of any drug that might create or aggravate a shortage.
The Times article quoted a Health Canada spokeswoman, “Canada’s drug supply is too small to meet the demands of both American and Canadian consumers. Bulk importation will not provide an effective solution to the problem of high drug prices in the U.S.”
That implies an advantage to the manufacturers, which could block exports to the U.S. by simply producing less than Canada needs.
U.S. drug prices are indeed the world’s highest and Canada’s are cheaper, owing to price controls asserted by its Patented Medicine Prices Review Board. Even so, however, they are the third highest among 25 comparable nations, 18% more than the average.
U.S. consumers spent $1,376 per capita on prescription drugs in 2019, according to a RAND Corporation study. Canadians spent $811, still far higher than the $461 reported for the United Kingdom or the $589 tallied for France. Relying on somewhat dated information, RAND calculated that Americans pay 2.5 times as much as people in other nations that belong to the Organisation for Economic Co-operation and Development (OECD).
Canada too has a powerful pharmaceutical lobby. According to news reports, it has stifled the review board’s most recent price-control undertakings. The director and two board members resigned, with one of them blaming the Canadian government for surrendering to industry pressure.
The important difference is still that Canada has comprehensive price controls, however effective they may be, and the U.S. does not. Our consumers will continue to be stiffed until we have them too.
Biden’s Inflation Reduction Act was a significant step forward by repealing the rule that Medicare could not negotiate prices with manufacturers. In a process now underway, the Centers for Medicare and Medicaid Services (CMS) has chosen the first 10 well-known, well-advertised drugs, including Eliquis and Jardiance, for mandatory negotiations. Agreed-upon prices would then be enforced, beginning Jan. 1, 2026, for all purchasers using Medicare Part D plans. Those are already limited to charging no more than $35 for a month’s supply of insulin.
What happens if a manufacturer does not come to terms by the present deadline of August 1? According to KFF, the government would levy an excise tax on the drug.
The Congressional Budget Office had estimated that the plan could save consumers more than $450 billion over a decade.
Even so, the negotiations apply only to expensive drugs for which there are no similar ones or generics, and they would be binding only for Medicare enrollees.
The general population needs more. Price controls should be as direct as those applying to the cost of electricity, another product that is essential to life.