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