There is no doubt that pre­scrip­tion drug prices are a major dri­ver in the over­all cost of care.

The ques­tion is what to do about it, and what reper­cus­sions would it have on oth­er parts of the mar­ket and the man­u­fac­tur­ers them­selves?  The Pres­i­dent has made par­tial good on his cam­paign promise, propos­ing a num­ber of solu­tions to the prob­lem, but will they work?  Some already say “no” because he is not using the pur­chas­ing pow­er of Medicare to dri­ve down prices, instead rely­ing on legal­is­tic pre­scrip­tions which will pro­mote trans­paren­cy and then…

  • Val­ue based pur­chas­ing in fed­er­al programs
  • Using Medicare to pay dif­fer­ent amounts for the same drug depend­ing on the illness
  • Pres­sure oth­er coun­tries to raise their prices for pre­scrip­tion drugs (oh, sure)
  • Require drug ads to include the price (but if the car­ri­ers are pay­ing, who cares?)
  • Ban gag claus­es for phar­ma­cists to they can rec­om­mend oth­er, less expen­sive drugs
  • The patent sys­tem will change to reward inno­va­tion and not pro­tect monopolies
  • Change the exist­ing rebate sys­tem (but how, when no one under­stands how it works)

That’s what it comes to in the analy­sis.  What was said in the long White Paper pro­duced by the Pres­i­dent and his team were the fol­low­ing goals:


  • Increas­ing com­pe­ti­tion – Accel­er­at­ing FDA approval of gener­ics, focus on FDA improv­ing effi­cien­cy of gener­ic devel­op­ment, clar­i­fy com­plex gener­ics, clos­ing loop­holes allow­ing brand names to game the sys­tem, mod­ern­ize Medicare Part D, put an infla­tion lim­it on Medicare Part B drugs, increas­ing the integri­ty of the Med­ic­aid rebate program


  • Low­er­ing list prices – trans­paren­cy with Medicare, ACA rebate pro­vi­sions, FDA eval­u­a­tion on direct to con­sumer advertising


  • Reduce patient out of pock­et spend­ing – end gag claus­es, require Part D providers to show low­er cost alter­na­tives on the Expla­na­tion of Ben­e­fits, eval­u­ate options to alow high cost drugs to be priced dif­fer­ent­ly based on indications