It can be difficult to strike a balance between consumer protection and government overreach, and rarely is that tightrope more strained than in regard to health care.
U.S. Sen. Dick Durbin, D-Illinois, recently introduced a proposal aimed at making things easier for people who struggle with the unpredictable costs of prescription medication by making it harder for companies to manipulate pricing without consequences.
Under the current rules, the U.S. Food and Drug Administration, after approving a new drug, gives its manufacturer between five and 12 years to basically control the market by refusing to review or approve general alternatives. Generics are friendly to the consumer because they allow price competition in both the retail and insurance markets. But that waiting period is important for the drug companies because without those protections, they would have less incentive to research and develop new medicines.
In other words, why spend all that time and money studying how to build a better mousetrap if the company across the street simply can put your designs into mass production?
Durbin’s plan would put soft caps on how much the consumer cost of a protected drug could increase in a given year. If a company raises the cost by more than 10 percent, the exclusivity period would end sooner, bringing generics into the marketplace. For each offense, according to Capitol News Illinois, the legislation would reduce an exclusivity period by six months, with an added month for every 5 percent over the threshold of 10 percent.
The legislation also targets multiyear price increases, building in clauses for when a drug rises more than 18 percent over two years or
25 percent over three years. The plan also requires drug manufacturers to report their price increases to the Department of Health and Human Services or have their exclusivity periods further shortened.
Any company that felt it had to raise prices above a defined threshold could make an appeal to the department to justify the increase, a clause that allows the legislation to be presented as more fair than simply dictating terms.
It’s easy to understand why Durbin thinks this is a good idea. The Centers for Disease Control and Prevention’s most recent data, from 2011 to 2014, said 48.9 percent of Americans reported using at least one prescription drug in the past 30 days, while 23.1 percent reported using three or more in the same window, and 11.9 percent used five or more. The CDC also said 76.2 percent of all physician office visits involved drug therapy of some sort, with
3.7 billion medications prescribed or provided. Those numbers don’t even include hospital emergency visits.
People on open-ended prescriptions rely on their drugs to keep physical health in balance and very likely need those costs to be somewhat fixed in order to budget effectively.
People trying to combat an illness can be unprepared for the sticker shock of a prescription drug and often don’t have the benefit of time to save a few extra bucks just to get back on their feet.
We’re interested to hear how the drug companies respond to the proposal. Acknowledging that such companies play a major role in the economy, including in Illinois, it’s important to consider whether they feel Durbin’s proposal strikes the right balance between respecting their development efforts and making sure companies aren’t squeezing profits from people who just want to feel healthy.
Exclusivity periods are important and shouldn’t be diminished without just cause, but neither can price gouging be tolerated. If Congress and drug manufacturers can find common ground that respects consumers and business interests, we’re hopeful for a legislative solution to a problem many of us have experienced at some point.