This week the prices of over 500 drugs went up in America, according to drug price transparency non-profit organization 46Brooklyn. This happens every year, usually coinciding with shouts of anger and disgust with the pharmaceutical industry’s greed. The shouts are muted this year, probably because, like it or not, we’re counting on Big Pharma to manufacture enough Covid-19 vaccines to end the pandemic. But the battle against high drug prices continues. Godspeed.
The median price increase reported was 4.6%, slightly lower than last year’s increase but about eight times the estimated inflation rate for 2020 of 0.62%. If you’re thinking I’m going to start talking about importing drugs from Canada now, you’re wrong – as helpful as that remains for Americans who go that route individually. [There’s an importation surprise at the end of this post for you, however.]
I’m thinking about the public health prism through which Canada views drug prices. I like the sound of that. Public health prism. What the hell does that mean? Well, I was perusing the updated guidelines on drug prices published by Canada’s Patented Medicine Prices Review Board (PMPRB) and one sentence stood out:
“The PMPRB’s existence as the only sector-specific price ceiling regulator under the Act reflects a recognition by policy makers that the unfettered ability to set prices for patented medicines is not in the public interest given the unique harm that can ensue if consumers are made to pay excessive prices for them.”
The public health prism through which Canada views drug prices is one where “the unfettered ability to set prices for patented medicines is not in the public interest.” The PMPRB is a quasi-governmental entity tasked with preventing excessive drug prices in Canada. Its creation was mandated under Canada’s Patent Act, as amended in 1987, and it is independent of Health Canada. Notice the phrase “set prices”. Whatever drug price increases happen in the U.S. – and they are slower than last year – drug companies set prices way higher in the U.S. than in Canada. The harm to Americans is unique in that due to these high set prices, we forego filling prescriptions at rates far higher than in any other high-income country.
It may surprise you that Canada’s drug prices are higher than in most other countries. They are done with that. One of the main mechanisms for preventing excessive drug prices in Canada is to set prices based on the average prices among a basket of other high-income countries, referred to as international reference prices. Last year, the PMPRB dropped the U.S. and Switzerland from the basket of countries, the only countries with higher drug prices on average than Canada, and added countries with lower prices: Australia, Belgium, Japan, the Netherlands, Norway, and Spain. The PMPRB11 basket of countries now includes Australia, Belgium, France, Germany, Italy, Japan, the Netherlands, Norway, Spain, Sweden, and the United Kingdom.
The idea for creating a drug price review board in the United States is not new. In 1993, former Congressman Pete Stark (D-CA) introduced the aptly called Prescription Drug Prices Review Board Act of 1993.Apparently, the Clinton administration was supportive of the idea at the time, but according to the New York Times form 1993, “under heavy lobbying by the drug industry, the Administration has apparently backed away from the idea…”
Flash forward 23 years: Congresswoman Rosa DeLauro (D-CT) introduced the Prescription Drug and Medical Device Price Review Board Act of 2016 (H.R. 6501). The bill would establish the U.S. version of the Canada’s PMPRB. Its summary states:
“The board must establish a formula for determining whether the average manufacturer price of a prescription drug or medical device over an annual quarter is an excessive price.”
The bill has a special treat for Americans who believe they simply should not pay higher prices for drugs than in other countries. The bill states that the board “shall promulgate regulations permitting individuals to safely import from an approved country into the United States prescription drugs, and devices, that are comparable to prescription drugs, and devices, for which the Board makes a final determination that the manufacturer is charging or has charged an excessive price in violation of section 5(a) of the Prescription Drug and Medical Device Price Review Board Act of 2016.”
Could we get this type of legislation across the finish line?
Yes, Georgia’s on my mind, too…