A decade ago seniors were boarding buses for Canada to buy cheaper prescriptions. Some are still ordering drugs from Canada and other countries. The passage of Medicare Part D drug coverage helped to address the issue of drug costs. And, many drugs lost patent protection in recent years with many lower cost generics coming on the market. Now the backlash against drug pricing is getting hot again.
It is probably only a matter of time before a legislator in New York State introduces a bill calling for drug companies to provide financial details and profit reports on drugs that cost $10,000 per year. Drug companies say they have created miracle drugs that cure hepatitis C but at a cost of close to $100,000 for treatments. Many consumer advocates believe the cost is arbitrary and designed to maximize profits. President Obama’s budget for Medicare Part D shows a 30% increase because of escalating prices.
Legislators in California, Massachusetts, Pennsylvania, North Carolina and some other states have bills introduced to require reporting on profits and expenses for high priced drugs. Business groups and health insurers and joining consumer advocates in supporting the legislation.
It is clear that this situation could only get worse as drug companies develop biotech drugs that are more customized for individuals and cost much more. However, it is also clear that the costs to Medicaid, Medicare and private insurance are unsustainable and something has to give.
Meanwhile companies are consistently and significantly raising the price of older drugs that have been on the market for years and require no additional investment. New generic drugs are coming on the market at very high prices as well and drug companies continue to try to thwart generics.
The other big issue being raised is about international trade. Many members of Congress are questioning whether new free trade agreements will allow drug companies to go to international trade courts to enforce their patents in some countries, especially those with lower drug prices. Eli Lilly became the first drug company to use the NAFTA trade agreement to sue Canada for $500 million saying it had violated its patents. The Canadian government accused the company of trying to turn the North American Free Trade Agreement’s arbitration panel into a “supranational court of appeal.”