But insulin’s not the only example. Since 2007, prescription drug spending has increased by about 40 percent, to $335 billion in 2018 from $236 billion. A study from last year showed this increased spending isn’t a result of new, better drugs hitting the market, either — rather that pre-existing brand-name and generic drugs were becoming increasingly expensive.
“Why do drug companies charge that much? Because they can,” said David Mitchell, a cancer patient and the founder of Patients for Affordable Drugs, a nonprofit advocacy group. “We let them.” Whereas most other developed countries allow the government to negotiate with drug manufacturers on behalf of its citizens for lower prices, the United States does not.
President Trump recently issued an executive order aimed at addressing this disparity, after a separate deal that proposed to cut drug costs by $150 billion fell apart. The order would enable Medicare to pay the same price for prescription drugs as those sold in other countries, but experts questioned whether the White House has the authority to put it into effect.
Dr. Elizabeth Seeley, an adjunct lecturer at Harvard’s school of public health whose research focuses on pharmaceutical pricing and policy, said that while this order or an international price reference would “certainly lower the cost of many patented, brand-name drugs,” it’s unclear what impact it would have on the market.
In the current system, pharmacy benefit managers, or P.B.M.s, act as middlemen between drug manufacturers and insurance companies and negotiate the receipt of rebates in exchange for listing a manufacturer’s medication as the preferred brand on their insurance formulary. Assuming they’re insured, patients pay the co-payment or coinsurance stipulated on their health plan’s policy, blind to the drug’s actual cost.
“They tell you that the value of the rebate is passed through to the patient in the form of lower prices, lower out-of-pocket and lower premiums,” said Mr. Mitchell, who has an incurable blood cancer and spends more than $15,000 for just one of the medications he takes to treat it. But all of those dealings are restricted from public knowledge. “Even members of Congress can’t find out what rebates are paid, because it’s all considered a trade secret.”