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Voters Agree On Need To Address High Drug Prices

Voters
across the nation may have varying views on who should be the next president but most agree that whoever wins must address the ever-rising cost of prescription drugs.

Indeed, 74
percent of respondents said that ensuring that high-priced drugs for chronic
conditions are affordable for people who need them should be a top priority for
the next president and Congress, according to a recent Kaiser Health Tracking Poll.

This is explained, in part, by other research that has found that brand-name
prescription drug prices were five to 198 percent higher in America than in the
other countries in the Organization for Economic Cooperation and Development
(OECD) in all three years studied, 2005, 2007 and 2010.

Per capita spending on prescription drugs in 2013 was $858, while the
average for 19 other developed countries was $400, another study revealed.

Some experts, however, said drug prices alone only tell part of the story and that reform will be difficult to achieve.

“There’s no
doubt that Americans pay a high price for prescription drugs,” Michael Tanner,
senior fellow for the Cato Institute, told AMI
Newswire. “But they also get very good prescription drugs, and the United
States really does the research and development for the pharmaceutical industry
worldwide.”

More than
half of all newly patented drugs are discovered in the U.S., which is important
to consider when assessing drug prices, Tanner added.

Devon
Herrick, health economist and senior fellow for the National Center for Policy
Analysis, argued that the public has heard a lot of horror stories of high-priced
drugs over the past year, but most drugs are, in fact, economical.

“About 88
percent of the drugs Americans choose are generic drugs now,” Herrick said. “There
have been a few cases of prices rising, but the reason for that is that generic
drugs are a victim of their own success.”

Many
companies are applying to make generic drugs but the FDA is behind on approving
them and has a backlog of about 4,000 applications, Herrick said.

“Some of the
examples we hear about price gauging on generic drugs are companies that are
taking advantage of this backlog, knowing that it could be 2 years, maybe 3,
before a competing product might get approved,” Herrick said.

While the
backlog has contributed to problems with generic drugs, brand-name drugs and
specialty drugs – which account for 11 and 1 percent of drugs on the market,
respectively — are costly because some are new therapy that aren’t available
in generic form.

“The problem
really lies with specialty drugs,” Herrick said. “Those are the new biologics,
(and) we have not managed in the U.S. to really get a handle on biosimilars –
generic biologics, for lack of a better term.”

An example
of this is insulin, which has been around for many years. The newest insulin
has shot up in price by about 400 percent in the last decade of less, Herrick
said.

“The reason
is there are three major competitors, but when you only have three competitors
and when you can’t ramp up production very easily, it becomes a market where
it’s susceptible to … informal collusion,” Herrick said.

Although it
is illegal for competitors to collectively agree to raise prices, very little
hinders competitors from jacking up prices in response to one of their
competitors doing so – the offspring of the lack of competition caused by the
government.

Because
bringing a new drug to the market is expensive and difficult, once a drug makes
it through the approval process, it remains a monopoly for many years, or
indefinitely if it is a biologic.

Making the
approval process less bureaucratic and less expensive would drive down the
costs, Herrick said.

“We still
want quality drugs, but it shouldn’t cost $1 billion to bring a new product to
market,” he said.

The
overwhelming question that begs to be asked is: What needs to happen for prescription
drug prices to drop?

Sixty-three
percent of the Kaiser Poll respondents said the top health care priority for
the next president and Congress should be ensuring that the government takes action
to lower prescription drug prices.

Michael
Cannon, director of health policy studies for Cato Institute said the
government created the problems that led to high drug prices and now Congress
needs to reform the FDA to remove the barriers to generic entry into the market,
and repeal the Affordable Care Act (ACA).

“Yes, the
prices are rising, but what consumers are really feeling is that the cost
sharing for these drugs is rising in Obamacare plans and it is because of the
incentives that Obamacare creates that insurance companies are paring back on
that coverage,” Cannon said.

What it all
boils down to is that the real agents of change are everyday citizens.

“It wasn’t
the insurance companies that raised a stink about EpiPen,” Herrick said. “It
was consumers going to the drug store and getting hit with a bill for $600.”

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