There appears to be little or no chance that the Obama administration will use its final year in office to rein in drug prices. Indeed, at a time when the drug industry is demonstrating a love of price controls—so long as the drug companies dictate the prices—Jason Furman, head of the Council of Economic Advisors, is minimizing the impact of escalating drug prices and seems opposed to measures that constrain them.
In a speech to the Hamilton Project, Furman warns against making too much of huge increases in drug spending because our annual drug spending, which was up 13 percent in 2014 to $374 billion, is only around 10% of overall health spending. (In Medicare, it’s 11 percent.) Rather than focus on the need for negotiated drug prices or the fact that many brand-name and generic drug-price increases have been out of control–we’re now paying three-times more than the Brits for top-selling drugs–Furman posits that “the main factor driving faster drug spending has been the arrival of costly, though often effective, new therapies.”
Furman even suggests that drug spending may not continue to grow as rapidly as it has been growing. However, based on recent price hikes, there’s good reason to believe that drug companies are likely to raise their prices even more. Moreover, with hundreds of new biologics in the pipeline, projections are that drug spending will grow monumentally over the next 15 years. And, though Furman mentions that “trends in this area have raised concerns,” Furman himself appears unconcerned about the increasing number of Americans with costly conditions who cannot afford needed medicines.
In Furman’s words: “While the implications of the recent acceleration in drug spending for the overall health care spending outlook should not be overstated since drug spending currently accounts for only about one-tenth of total health care spending and growth may not persist at its recent rapid pace, trends in this area have raised concerns about access and affordability in both the public and private sectors.”
Based on his comments, it’s pretty clear that Furman is not running for political office. Thankfully, both Hillary Clinton and Bernie Sanders are responding to the public outcry over prescription drug prices and calling for drug price negotiation in the Medicare program, if not for everyone.
Government drug price negotiation ranks as the top policy issue for Americans. But, with a strong Republican majority in the House of Representatives, it’s unlikely we will see Congress enact legislation to control prescription drug prices in the near future. Some states, including California and Ohio, are opting to address the issue themselves. This is another reason your vote is important in 2016.
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