It’s a new calendar year – yet the tired drug pricing control policies of 2021 continue to float around Capitol Hill.
Proponents of price controls justify their actions by claiming drug prices are “skyrocketing” and hurting Americans. That’s not surprising; For years drug prices have been a convenient political talking point for many.
The data, however, tell a different narrative about the true drivers of health spending. Spoiler: It’s not drug prices.
Consider that the prices of brand-name drugs actually fell last year, according to a just-released analysis from Dr. Adam J. Fein, CEO of Drug Channels Institute.
The economic context of last year makes the price decline of brand-name drugs all the more noteworthy:
- Supply chain woes and disruptions continued throughout 2021.
- Job resignations occurred at abnormally high rates.
- Companies across every industry lacked precious raw materials for their products.
- And we saw the U.S. inflation rate rise to 6.8% -- its highest point since 1982, per Bureau of Labor Statistics data.
Moreover, this is decline was no anomaly, either. Last year marked the fourth consecutive year of declines for list prices. Per the report, drug list prices “slowed sharply, from 13.5% in 2014 to 4.3% through the first three quarters of 2021.” Net drug prices, meanwhile, fell -1.2% during the same time-period.
Not only are prices declining, but they also represent a relatively small percentage of overall healthcare spending. Dr. Fein notes that pharmaceuticals account for just 15 percent of total U.S. health spending. This is compared to the prices of other health products and services – such as hospital and physician administration fees – which have historically consumed the bulk of U.S. health care spending.
Yet some lawmakers seem dead set on pursuing dangerous price control policies. Not only will these policies fail to address the root cause of rising health spending, they will harm patients by destroying the vibrant innovation ecosystem responsible for new cures and therapies.
Price controls will drastically slow the creation of lifesaving drugs and treatments for Americans. In fact, one 2021 study shows how price controls ultimately have devastating impacts on scientists ability to research and develop new drugs for patients. This means fewer cures and treatments for the patients who them most.
The bottom line: If lawmakers want to make care more affordable and accessible for patients in 2021 then drug price controls are far from the starting point. These policies will do more harm than good and punish an industry – and the patients it helps – that has been both stable and critical during the fight against COVID-19.
To learn more about drug costs and the prescription drug supply chain, watch “Follow the Pill” here.