Empowering Medicare to negotiate drug prices with manufacturers is a good way to reduce drug prices. Addressing federal market protections may be a better one.

Three Harvard-affiliated doctors asserted this week in an article in the Journal of the American Medical Association that branded drugs enjoying federal market protections are driving the bulk of US spending on prescription drugs. They point to studies showing that brand-name drugs make up 10 percent of prescriptions filled but account for 72 percent of spending on drugs.

The doctors argue that long, government-approved market exclusivity periods are the main reason prescription drug prices in the US are more than twice as high as in other Western countries. Less expensive generic pills cannot be sold until these exclusivity periods expire, which can be as long as a decade.

The major pharmaceutical companies offer their usual argument that shortening exclusivity periods will discourage investment and stifle innovation. No one is arguing the companies should not make back their investment and earn a profit. Dr. Aaron S. Kesselheim, one of the study's authors, told The Boston Globe that drugs are priced according to what the market will bear, not on a company's research outlays. This indicates profiteering. The companies also extend their market protection by winning patents on "new" drugs with slightly different formulations than their predecessors.

Hillary Clinton and Donald Trump actually agree on the need to allow Medicare, the largest U.S. health insurer, to negotiate drug prices. That should happen, and the next big step is reforming market protection and patent regulations related to drug pricing.



Advertisement