Can Corporate America Lower Drug Prices? Amazon vs. Walmart

June 24 09:00 2018 by ushadmin

Drug prices are increasing at 10 times the rate of inflation, according to a recent congressional report  and corporate America may be the key to curbing costs.

The former statement comes as no surprise. Americans spend $450 billion on medications annually, a figure projected to reach as much as $610 billion by 2021.(www.cnbc.com) Every family physician knows patients who have cut their meds in half, skipped doses or simply forgone medications because they could not afford them. We’ve spent endless hours on prior authorizations or rewriting prescriptions to meet formulary demands and get patients more affordable medications.

Pharmaceutical companies, payers and Congress have been unable — and, in some cases, unwilling — to drive costs down, but now there are new players entering the health care field: corporate retailers. Walmart is in talks to buy Humana,(www.foxbusiness.com) poised as competition for the CVS-Aetna merger. Meanwhile, Walmart rival Amazon is pursuing a joint venture with Berkshire Hathaway and JP Morgan Chase. These retailers could drive down drug prices by collapsing the complex layers of the pharmaceutical supply chain.

But who’s to blame for high drug prices? And what, if anything, can family physicians do about it?

Cost increases are due to both rising costs of older drugs and newer, expensive medications for conditions such as hepatitis C and cancer. Many people point the finger at pharmaceutical companies, who naturally want to maximize profits. The industry contends that it puts a significant investment into developing new products, and in 2013, eight of the top 20 spenders on industrial research and development(blogs.sciencemag.org) were pharmaceutical companies. However, the industry has been accused of overstating how much it really costs(www.npr.org) to develop certain drugs, and a 2017 analysis(medicine.wustl.edu) found that more than 90 percent of new and/or commonly prescribed medications were developed with funding from the NIH — that is, taxpayer funding.

One weapon against rising drug prices, theoretically, is generic alternatives to brand-name drugs. But this only works well if there are multiple generic alternatives. Having just one generic on the market decreases the price of the brand-name product only modestly. And unfortunately, the prices of many generic drugs also are increasing.(www.marketwatch.com) It doesn’t help that some pharmaceutical companies use a “pay-to-delay” tactic,(hbr.org) offering money to generic manufacturers to stop a competing product from hitting the market.

Aetna recently announced it will pass on discounts it negotiates on prescription drugs to its members — a move similar to what UnitedHealth is already doing. The announcement highlights the tension between the two industries, as pharmaceutical companies blame insurance companies for drug price woes. The Pharmaceutical Research and Manufacturers of America, a drug industry lobbying group, recently launched a campaign(www.biopharmadive.com) blaming insurance companies and pharmacy benefits managers (PBMs) for blocking patients from applying cost-saving copay coupons to their deductibles. Copay coupons reduce insurance company revenues as patients end up spending less out-of-pocket, which is why both UnitedHealth and Express Scripts now count only what patients actually pay toward their deductibles…