Government price setting won’t stop insurers from shifting costs to patients

Nicole Longo
Nicole Longo February 2, 2022

Government price setting won’t stop insurers from shifting costs to patients.

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The drug pricing provisions in the Build Back Better Act (BBBA) would allow the government to set the price of certain medicines in Medicare. This is a misguided approach that threatens future advances and won’t stop insurers from pocketing savings rather than lowering costs for patients.

Not only does the price setting plan Congress is considering fail to meaningfully address the challenges patients have affording their medicines, it makes a broken system worse by disincentivizing further research after a medicine is approved and discouraging development of generic and biosimilar medicines. We know from other countries that when governments resort to price-setting mechanisms, patients have access to fewer new medicines and wait longer to get the medicines they need. This is in large part because government price setting historically leads to a decrease in investment in research and development of new medicines and delayed access for those medicines that do get made. Europe, for example, used to lead the world in biopharmaceutical innovation but that changed after European governments implemented price-setting policies. For instance, nearly 90% of new medicines launched since 2011 are available in the United States compared to just 48% in France and 60% in the United Kingdom – countries that each use some form of government price setting.

Bottom line? Government price setting won’t make patients’ lives better. Why? Because even though health plans and pharmacy benefit managers (PBMs) negotiate rebates and discounts from biopharmaceutical companies, many patients with deductibles and coinsurance do not benefit directly from these savings and are instead charged cost sharing based on the full undiscounted prices of medicines. Government price setting fails to stop the health plans and the PBMs they work with from pocketing discounts on prescription medicines. And it’s not going to stop those same entities from shifting costs to patients.

We need to make insurance work like insurance again and ensure savings are shared with patients at the pharmacy, not pursue flawed policies that could put access to medicines at risk.

Tell Congress to focus on commonsense solutions that will help people access and afford their medicines.

Topics: Medicare, Out-of-Pocket Costs, Pharmacy Benefit Managers, Policy Solutions, Proactive Agenda, Government Price Setting