Center for American Progress

RELEASE: New CAP Report Makes Case for Public- and Private-Sector Reforms to Curb Rising Drug Costs
Press Release

RELEASE: New CAP Report Makes Case for Public- and Private-Sector Reforms to Curb Rising Drug Costs

Washington, D.C. — In a new report published today, the Center for American Progress addresses the rising costs of prescription drugs and challenges policymakers to enact reforms that will lower costs, improve public health, and jumpstart innovation. The report offers integrated policy solutions targeted at both the public and private sectors. Nearly half of all Americans take a prescribed drug in any given month, and CAP’s recommendations will support:

  • Lowering drug costs across the board
  • Ensuring that relative drug prices reflect the benefits to patients
  • Addressing drug costs paid for by both public programs and private insurance

Drug prices are now rising at a rapid enough pace that they are affecting the overall rate of health care cost growth. It is therefore not surprising that public opinion polls indicate that consumers across the political spectrum are demanding reforms to lower drug prices at unprecedented levels. CAP’s report recognizes that enough is enough and that the time has come for the public and private sectors to come together and implement changes to halt sky-high drug prices.

“Prescription drugs save lives and can prevent costlier, more invasive treatments, but that doesn’t mean the status quo is working,” said Topher Spiro, Vice President for Health Policy at CAP. “The growing crisis around drug costs is unsustainable. We are proposing a set of reforms that would lower drugs costs across the board and ensure that prices reflect the benefits to patients.”

In the report, CAP offers new policy recommendations on how to lower costs for consumers, bring about transparency to the pharmaceutical industry, and encourage innovation through rewarding drugs that show a measurable benefit to patients, including a range of options that are available without the need for any new federal legislation.

CAP’s integrated package of reforms to curb rising drug costs

1. Encourage true innovation

  • Provide transparency on research and development, or R&D, costs.
  • Categorize new drugs by their comparative effectiveness. Using a private, independent organization, categorize new drugs by whether they provide no added benefit, minor added benefit, or significant added benefit compared with existing drugs.
  • Provide star ratings of comparative effectiveness in drug labeling and marketing.
  • If drug companies do not invest a minimum amount of money in R&D, require them to pay a refund to the National Institutes of Health.

2. Ensure that the system pays for value

  • Develop voluntary recommendations of payment ranges to inform negotiations between payers and drug companies by using a private, independent organization.
  • Incentivize drug companies to charge reasonable prices. If negotiated prices fall outside the recommended range, require public justifications and license patents that result from federally funded research to competitors.
  • Level the playing field for private-sector negotiations by aggregating the purchasing power of pharmacy benefit managers and payers.
  • Reform Medicare payment for physician-administered drugs.
  • Allow payers to pay for success.
  • Vary Medicaid drug rebates based on the comparative effectiveness of drugs.

3. Lower out-of-pocket costs for individuals

  • Limit cost sharing in marketplace plans and employer plans.
  • Provide cost-sharing information for specific drugs to consumers and physicians and allow insurers to have more flexibility in designing their drug formularies.

Read the full report, “Enough Is Enough: The Time Has Come to Address Sky-High Drug Prices” by Topher Spiro, Maura Calsyn, and Thomas Huelskoetter, online here.

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For more information on this topic or to speak with an expert, contact Liz Bartolomeo at [email protected] or 202.481.8151.