Prescription Drugs: Far too Costly

July 14, 2021

Office of Government Relations

EPPN Health Care Series Part 6

“O God of heavenly powers, by the might of your command you drive away from our bodies all sickness and all infirmity: Be present in your goodness with your servant, that her weakness may be banished and her strength restored; and that, her health being renewed, she may bless your holy Name; through Jesus Christ our Lord. Amen.”

-Book of Common Prayer, pg. 458

Prescription drugs are a miracle of modern medicine. We can treat and cure a vast array of diseases that would have been death sentences in previous generations. More Americans than ever rely on life-saving prescription drugs to manage chronic illnesses and maintain their quality of life. Yet Americans speak with near unanimity on their disgust with the rising cost of prescription drugs. The Kaiser Family Foundation recently found that 79 percent of Americans think the prices of prescription drugs are unreasonable.

The Episcopal Church has a long history of supporting efforts to expand affordable health care to all Americans; that includes access to affordable prescription drugs. In 1991 General Convention called upon the Office of Government Relations to “advocate for legislation for comprehensive medical benefits to include… prescription drugs.”

High Costs for American Consumers

As noted in previous parts of this series, health care in the United States is considerably more expensive than in nations of comparable wealth and economic development. Prescription drugs are no exception. The United States spends more on prescription drugs than peer nations. Indeed, the U.S. makes up 41 percent of global retail pharmaceutical spending.

Despite America’s high spending rates, equitable access to prescription drugs remains a problem. Consumers face several barriers to accessing affordable drugs. Many millions of Americans lack any health insurance at all, which makes most prescription drugs completely unaffordable to them. Others have health insurance, but their plans do not cover the specialty drugs they require to treat rare or serious diseases. Others are enrolled in insurance plans with unmanageable cost-sharing provisions such as high deductibles and co-insurance provisions.

The Government’s Role

The U.S. Government plays an outsized role in the prescription drug market. According to the Centers for Medicare and Medicaid Services, federal, state, and local government’s combined share of retail prescription drug spending rose from 25 percent in 2005 to 41 percent in 2019. It is forecasted to rise to 53 percent by 2028. In the last two decades, the government has taken on a greater share of prescription drug costs through subsidized drug coverage programs like Medicare Part D.

The different levels of government, and the federal government itself, operate a wide variety of drug purchasing schemes. Medicare Part B covers specific categories of drugs. Medicaid covers all prescription drugs. If providers decide to sell their drugs to state Medicaid agencies, they must enter into a rebate agreement with the Secretary of Health and Human Services, which requires them to provide information on their lowest-cost drug prices. This is one among many Congressionally mandated drug discount and contracting systems.

Public policy also plays a major role in the high price of prescription drugs. The patent protections issued by the government essentially give companies a monopoly on many drugs, thus allowing manufacturers to artificially inflate the prices of their drugs. There is also strong evidence that the cost of developing a drug has little-to-no impact on the eventual price of the drug.

President Biden’s Proposals

During his presidential campaign, Joe Biden made tackling prescription drugs a part of his health care platform. He proposed allowing Medicare to negotiate with drug manufacturers over prices. Biden’s campaign plan also included improving the supply of generic drugs, allowing consumers to purchase prescription drugs from abroad, limiting price increases for brand, biotech, and generic drugs to inflation, and limiting launch prices for drugs that have no competitors.

Since taking office, President Biden has not made prescription drug pricing a major focus of his administration. The president has noted his support for lowering prescription drug prices and allowing Medicare to negotiate for drug prices, most prominently in his address to a joint session of Congress. Biden also left prescription drug policy proposals out of his 2022 budget proposal and his infrastructure plans. Nonetheless, the White House has voiced President Biden’s continuing support for addressing this issue.

Congressional Proposals

There are several proposals in Congress to address prescription drugs. The Medicare Prescription Drug Price Negotiation Act would require the Centers for Medicare & Medicaid Services to negotiate with pharmaceutical companies regarding prices for drugs covered under the Medicare prescription drug benefit. The Affordable and Safe Prescription Drug Importation Act allows wholesale distributors, pharmacies, and individual consumers to import drugs from abroad. The Prescription Drug Price Relief Act would create several oversight and disclosure requirements relating to the prices of brand-name drugs.

Despite the flowering of diverse proposals on the Hill, efforts to control prescription drug prices have fallen flat for years. Previous presidents have tried, and failed, to substantially address the issue. The path forward divides Democrats, who only have very narrow majorities in both chambers of Congress, and Republicans, who are generally opposed to key Democratic priorities like Medicare price negotiation.

Take Action

Please continue to check with the Episcopal Public Policy Network as we advocate for policies to make health care more affordable to the American people.

Additional Resources

General Convention Resolutions