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Addressing the High Cost of Prescription Drugs

BY ANDY CHASIN – The United States spends more per person on prescription drugs than any country in the world, even when compared to other wealthy nations like Canada, Japan and Germany. We spend about 36 percent more than Canada, where the government negotiates down prices. For the same drug made by the same pharmaceutical company, the wealthiest Europeans will pay far less than middle class Americans.

The high launch prices of new drugs and unjustifiable increases for older drugs have contributed to the growing sentiment that the market for drugs in this country is broken. One of the major concerns of our members is being able to afford the high cost of drugs, particularly so-called “specialty” drugs. These drugs are not necessarily complex—it is estimated that Sovaldi, the $1,000 per pill drug for Hepatitis C, costs only a few dollars to make. What’s special about these drugs is often the price, with a course of treatment for many drugs running hundreds of thousands of dollars per year.

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An analysis conducted for Bloomberg found that since October 2007, the cost of brand-name medicines has soared, with prices doubling for drugs that treat conditions ranging from multiple sclerosis to cancer and blood pressure. Just last month Turing Pharmaceuticals announced a 5,000 percent increase in the cost of Daraprim, a generic drug used to treat potentially life-threatening parasitic infection. The drug went from $13.50 to $750 per tablet. These trends of ever-increasing prices, even for old drugs that have long lost patent protection, are the signs of an unhealthy market for drugs.


The link between the cost of drugs and our affordability mission led Blue Shield to launch a campaign last year to shine the media spotlight on the problem and get policy makers engaged in finding solutions. At the federal level, hospitals, doctors, employers and consumer groups have joined together to call for an end to unsustainable pricing. In California, stakeholders developed a transparency bill – AB 463, by Assembly member David Chiu (D-San Francisco) – in the state legislature that would require, for the first time, drug companies to provide some basic information about how they reach pricing decisions. While lobbyists for the pharmaceutical industry succeeded at stalling the bill this year, states around the country are now debating similar legislation.

Importantly, the public is quickly becoming aware of this issue. Kaiser Family Foundation released a poll finding that drug prices are the top health concern of the public. Nearly 3 in 5 Americans believe prices are unreasonable and that the government should take action to lower prescription drug prices.

The issue has also made its way onto the presidential stage, with Hillary Clinton, Bernie Sanders and Marco Rubio calling out drug companies for their practices.

While there is a long way to go to change policy regarding prescription drug pricing, Blue Shield of California will continue to be a leader in advocating for drug pricing that is sustainable for the public and affordable for our members.

Andy Chasin is director of public policy at Blue Shield of California.


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