The Congressional Budget Office (CBO) recently released a new report looking at trends in spending, prices and use of prescription drugs. While some politicians are trying to use the report to justify a flawed policy that would let the federal government set the price of medicines, a closer, less partisan look at CBO’s findings reaffirms that the biopharmaceutical lifecycle is working exactly as intended.
Even with the introduction of many new treatments and cures, the CBO found that the average net price per prescription fell from $57 in 2009 to $50 in 2018 in the Medicare Part D program and from $63 to $48 in the Medicaid program.
Here are a few key points to keep in mind when reviewing the report:
- The report clearly shows that the system is working to control costs exactly as it should. Over time, new medicines lead to lower-cost generics and biosimilars that bring long-term value to patients and the health care system. Competition among brand, generic and biosimilar treatments generate significant savings in the system. These savings then create the room needed to fund new, innovative medicines.
- There is no similar type of cost containment for other health care services, like hospital procedures. For example, the price of a medicine commonly used to prevent cardiovascular disease dropped 95% between 2007 and 2017, while the average charge for a surgical procedure to treat it increased 94% over the same period.
- Growth in average brand medicine prices is largely driven by technological advances and new medicines entering the market to address unmet patient needs. Many of these new medicines treat complex conditions, such as cancer and autoimmune disorders, and have dramatically improved patients’ health and quality of life.
- Looking at just the price of medicines ignores the human and societal benefits they provide. Better treatments lead to better health outcomes and more effective care, including reductions in avoidable hospitalizations. In fact, CBO notes that prescription medicines “offer wide-ranging benefits, such as reducing the need for services provided by physicians and hospitals, improving the quality of life, and extending life.”
The fact is the system of innovation we have today works extremely well. The CBO report confirms it. New treatments and cures are reaching patients, improving lives and generating savings across the health care system. Total spending on medicines remains a small share of U.S. health care spending and is expected to remain just 14% of total health spending over the next decade.
This doesn’t mean there aren’t patients who are struggling to afford their medicines, and that’s why the biopharmaceutical industry continues to urge Congress to pass patient-centered solutions that will lower out-of-pocket costs and preserve patient access to medicines and future innovation
But adopting extreme proposals like government price setting will upend our innovation ecosystem without delivering meaningful relief to patients at the pharmacy. There's a better way.