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Let feds negotiate drug prices, experts say

by Maggie Fox /  / Updated 

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Congress this week turned its attention back to one of the No. 1 concerns of American voters: high drug prices.

Now they have a road map for how to do it. The National Academies of Sciences, Engineering and Medicine has a detailed report laying out ways to bring down U.S. drug prices.

It includes letting federal agencies such as Medicare negotiate better prices; forcing companies and insurers to publish prices for drugs; limiting direct advertising of drugs; and limiting what patients are forced to pay out of their own pockets for drugs.

“The federal government should consolidate and apply its purchasing power to directly negotiate prices with the producers and suppliers of medicines,” the report recommends.

Related: New group takes on drug prices and big pharma

Advertising often causes patients to ask for pricey, brand-name drugs over cheaper generic alternatives. The report recommends government action to discourage so-called direct-to-consumer drug ads.

And insurance company co-pays and cost-sharing requirements are stopping patients from taking the drugs they need and should be limited, the committee said.

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Senators this week grilled Alex Azar, the new nominee to head the Health and Human Services Department, on what he would do to lower drug prices. They also pressed him on whether his experience as a drug company executive for Eli Lilly and Co. would help him find better ways to lower drug prices, or might lead him to protect drug makers.

“First, drug prices are too high. The President has made this clear. So have I,” Azar told a Senate committee Wednesday.

Related: What's to blame for high U.S. drug costs?

“I believe I can hit the ground running to work with you and others to identify solutions here,” he added. “I think we need to look at why Americans are paying more than those in Europe and Japan. Is that fair?”

Some advocacy groups have called for allowing Americans to import cheaper drugs from other countries but the committee balked at recommending that. “Even if importation or reimportation, or both, were allowed, it is not clear how much they would reduce drug costs for U.S. consumers,” it said.

But it did say companies should be stopped from using patent laws and other protections to keep artificial monopolies on drugs. The committee said the Department of Justice and the Federal Trade Commission do what they can to stop big companies from paying competitors to delay introduction of similar or generic drugs.

And hospitals and doctors should limit visits from charming drug representatives, whose persuasive techniques and bags full of samples have been shown to influence prescribing habits.

Related: Consumer Reports see drug price increases for 28 million Americans

Rising drug prices are an important issue, the committee said.

“Total medical expenditures are rapidly approaching 20 percent of the gross domestic product and are crowding out other priorities of national importance,” the report says.

“The use of increasingly expensive prescription drugs is a significant part of this problem, making the cost of biopharmaceuticals a serious national concern with broad political implications.”

Drugs are not the biggest cause of rising prices. Prescription drugs represent anywhere between 10 percent and 16 percent of total medical costs. But drug prices have the attention of Americans.

“Public concern seemingly reached a tipping point when media reports cited the unanticipated increase in the price of a two-pack of EpiPens (used to administer epinephrine, a treatment for potentially fatal allergic reactions) from $160 to more than $600,” the report reads.

Two members of the committee, both drug company executives, disagreed with many of the recommendations.

Related: Shkreli isn't to blame for high drug prices

“We believe that the committee’s recommendations, if actually implemented, will lead to unintended consequences that will damage the health of people in the United States and damage the health of an industry whose innovations are essential to addressing unmet medical needs in the future,” Michael Rosenblatt, chief medical officer at Merck and the late Henri Termeer, former CEO of Genzyme Corp., wrote in a dissent.

“New medicines and vaccines are generated and enter clinical practice by a process that is far from perfect but which is not fundamentally broken.”

The whole committee agreed that it’s important not to go too far. If companies cannot make money, they may not have the incentive to develop new and better drugs, they noted.

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