In the 1952 Oscar-winning movie “High Noon,” Gary Cooper’s face was tense and pained as he single-handedly faced a gang of killers. The pain wasn’t acting: Cooper suffered from severe stomach ulcers. He drank milk to get some relief, but clearly, the milk did not work.
Until the late 1970s, the only real option for treating ulcers was surgery. Then the blockbuster drug Tagamet was released, and the need for ulcer surgery plummeted. Now, Tagamet is sold over the counter.
Many formerly debilitating and fatal chronic diseases, genetic conditions, and cancers are now curable or manageable thanks to medical innovation. Treatments that would once have been miraculous are commonplace. But if a patient cannot afford innovative treatments, to them it is as if that innovation never occurred.
As a physician, I treated the uninsured for decades. I saw the tension between the person in front of me who needed affordable medicine and the drug developer motivated by profits to research the new treatments needed to save future patients. Present affordability and future innovation must be balanced. This life experience guides my approach to drug pricing as the ranking member of the Senate’s Health, Education, Labor, and Pensions (HELP) Committee.
Each actor in the system points to another or to unintended consequences of public policy as the source for high pharmaceutical costs. Pharmacy benefit managers, insurance companies, and drug manufacturers will all blame each other, but the problems are diverse and intertwined. Just as Christmas lights cannot be untangled with a pair of scissors, to preserve the benefits of our drug research and production system the causes of high prices must be teased apart.
Congress should thoroughly review the entire supply chain and the public policies that influence it. There are several places where we can begin.
Americans are rightfully concerned that sticker prices for some drugs are too high. Manufacturers can game the regulatory system to delay competition and preserve their ability to charge higher prices. The laws on the books allow them to do this. Congress should close loopholes, such as the “parking” of 180-day exclusivity and abuse of the citizen petition process. The bipartisan Expanding Access to Low-Cost Generics Act of 2023, which was passed out of the HELP Committee in May, aims to prevent this practice by allowing other generic manufacturers to advance in front of the first-filer if that manufacturer does not bring their drug to market in a timely manner.
There is also interest in addressing the potential misuse of the 340B program, a system intended to provide affordable medicines to low-income and uninsured patients. A 340B-qualifying hospital that treats low-income and uninsured patients can use the program to buy outpatient prescription drugs at a discount of 25 percent to 50 percent or more.
However, certain providers that clearly do not treat low-income patients take advantage of the program’s loose requirements to access the discounted drugs to maximize profit. This costs pharmaceutical companies billions. It is plausible companies compensate for this by inflating prices for everyone else. Other bad actors receive the 340B discount but do not pass the savings on to uninsured patients. Congress should increase 340B transparency and accountability to preserve the intent of the program.
Another opportunity for reform comes in pharmacy benefit managers, who have recently been criticized for their role in increasing drug costs. While PBMs have an important role in price negotiation, there can be a conflict of interest. PBMs receive greater rebates from higher sticker prices, which would incentivize promoting drugs with higher sticker prices. In practice, these rebates often do not reach the patient. Instead, they may be used to add to the profits of the insurance companies or the PBMs involved in the transaction, lower the cost of premiums for other patients, or otherwise fail to benefit the patient who is actually paying the bill. This is the “reverse Robin Hood effect.” Those who are sicker subsidize those who are better off. This is wrong.
There are examples of PBMs preferring more expensive insulin instead of a cheaper alternative. This dynamic hurts patients whose cost share is at times based on sticker price.
In May, the HELP Committee voted to pass bipartisan legislation that improves transparency of PBMs so patients can know what they’re expected to pay, and employers have the ability to shop around for the best deal.
The committee also passed bills to speed lower-cost generic drugs coming to market by preventing gamesmanship and abuse of the citizen petition process, preventing the “parking” of 180-day exclusivity, and changing the Orphan Drug Act exclusivity to align with the scope of Food and Drug Administration approval, which would allow more drugs for rare diseases to come to market.
These are a few of the many areas where the HELP committee can untangle this knot. Uncovering and addressing misaligned incentives will reduce the price of drugs and make the system work better for patients.
And unlike policies like price setting or importation that hack away at the entire system for the possibility of short-term benefit, addressing these underlying problems will preserve the incentives to invest in innovation.
We have to reduce the price Americans pay for their medications. This is a priority for Republicans and Democrats alike. We need more stories of diseases and conditions like Gary Cooper’s that are now rarely seen or are much less severe. This will always include a new medicine or treatment, and with our legislation, along with future reforms, we can ensure that these miracle products are not out of reach for Americans. This is how to heal a sick patient.
I look forward to working with my colleagues on both sides of the aisle to continue our work to lower drug costs and improve access to the best possible care for American families.
Dr. Bill Cassidy is the senior senator from Louisiana and ranking member of the Senate Health, Education, Labor and Pensions (HELP) Committee. Before his time in Congress, Dr. Cassidy worked for over 25 years in the Louisiana charity hospital system and taught medical students and residents at LSU Medical School.