National Academies Press: OpenBook
Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2017. Making Medicines Affordable: A National Imperative. Washington, DC: The National Academies Press. doi: 10.17226/24946.
×
Page R1
Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2017. Making Medicines Affordable: A National Imperative. Washington, DC: The National Academies Press. doi: 10.17226/24946.
×
Page R2
Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2017. Making Medicines Affordable: A National Imperative. Washington, DC: The National Academies Press. doi: 10.17226/24946.
×
Page R3
Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2017. Making Medicines Affordable: A National Imperative. Washington, DC: The National Academies Press. doi: 10.17226/24946.
×
Page R4
Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2017. Making Medicines Affordable: A National Imperative. Washington, DC: The National Academies Press. doi: 10.17226/24946.
×
Page R5
Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2017. Making Medicines Affordable: A National Imperative. Washington, DC: The National Academies Press. doi: 10.17226/24946.
×
Page R6
Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2017. Making Medicines Affordable: A National Imperative. Washington, DC: The National Academies Press. doi: 10.17226/24946.
×
Page R7
Page viii Cite
Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2017. Making Medicines Affordable: A National Imperative. Washington, DC: The National Academies Press. doi: 10.17226/24946.
×
Page R8
Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2017. Making Medicines Affordable: A National Imperative. Washington, DC: The National Academies Press. doi: 10.17226/24946.
×
Page R9
Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2017. Making Medicines Affordable: A National Imperative. Washington, DC: The National Academies Press. doi: 10.17226/24946.
×
Page R10
Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2017. Making Medicines Affordable: A National Imperative. Washington, DC: The National Academies Press. doi: 10.17226/24946.
×
Page R11
Suggested Citation:"Front Matter." National Academies of Sciences, Engineering, and Medicine. 2017. Making Medicines Affordable: A National Imperative. Washington, DC: The National Academies Press. doi: 10.17226/24946.
×
Page R12

Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

Making Medicines Affordable: A National Imperative Norman R. Augustine, Guru Madhavan, and Sharyl J. Nass, Editors Committee on Ensuring Patient Access to Affordable Drug Therapies Board on Health Care Services Health and Medicine Division A Consensus Study Report of PREPUBLICATION COPY: UNCORRECTED PROOFS

THE NATIONAL ACADEMIES PRESS 500 Fifth Street, NW Washington, DC 20001 This activity was supported by grants from the American College of Physicians, Breast Cancer Research Foundation, Burroughs Wellcome Fund, California Health Care Foundation, The Commonwealth Fund, Laura and John Arnold Foundation, Milbank Memorial Fund, and the Presidents’ Committee of the National Academies of Sciences, Engineering, and Medicine. Any opinions, findings, conclusions, or recommendations expressed in this publication do not necessarily reflect the views of any organization that provided support for the project. International Standard Book Number-13: 978-0-309-XXXXX-X International Standard Book Number-10: 0-309-XXXXX-X Digital Object Identifier: https://doi.org/10.17226/24946 Library of Congress Control Number: Additional copies of this publication are available for sale from the National Academies Press, 500 Fifth Street, NW, Keck 360, Washington, DC 20001; (800) 624-6242 or (202) 334-3313; www.nap.edu. Copyright 2017 by the National Academy of Sciences. All rights reserved. Printed in the United States of America Suggested citation: National Academies of Sciences, Engineering, and Medicine. 2017. Making medicines affordable: A national imperative. Washington, DC: The National Academies Press. doi: https://doi.org/10.17226/24946. PREPUBLICATION COPY: UNCORRECTED PROOFS

The National Academy of Sciences was established in 1863 by an Act of Congress, signed by President Lincoln, as a private, nongovernmental institution to advise the nation on issues related to science and technology. Members are elected by their peers for outstanding contributions to research. Dr. Marcia McNutt is president. The National Academy of Engineering was established in 1964 under the charter of the National Academy of Sciences to bring the practices of engineering to advising the nation. Members are elected by their peers for extraordinary contributions to engineering. Dr. C. D. Mote, Jr., is president. The National Academy of Medicine (formerly the Institute of Medicine) was established in 1970 under the charter of the National Academy of Sciences to advise the nation on medical and health issues. Members are elected by their peers for distinguished contributions to medicine and health. Dr. Victor J. Dzau is president. The three Academies work together as the National Academies of Sciences, Engineering, and Medicine to provide independent, objective analysis and advice to the nation and conduct other activities to solve complex problems and inform public policy decisions. The National Academies also encourage education and research, recognize outstanding contributions to knowledge, and increase public understanding in matters of science, engineering, and medicine. Learn more about the National Academies of Sciences, Engineering, and Medicine at www.nationalacademies.org. PREPUBLICATION COPY: UNCORRECTED PROOFS

Consensus Study Reports published by the National Academies of Sciences, Engineering, and Medicine document the evidence-based consensus on the study’s statement of task by an authoring committee of experts. Reports typically include findings, conclusions, and recommendations based on information gathered by the committee and the committee’s deliberations. Each report has been subjected to a rigorous and independent peer-review process and it represents the position of the National Academies on the statement of task. Proceedings published by the National Academies of Sciences, Engineering, and Medicine chronicle the presentations and discussions at a workshop, symposium, or other event convened by the National Academies. The statements and opinions contained in proceedings are those of the participants and are not endorsed by other participants, the planning committee, or the National Academies. For information about other products and activities of the National Academies, please visit www.nationalacademies.org/about/whatwedo. PREPUBLICATION COPY: UNCORRECTED PROOFS

In memory of Henri Termeer 1946–2017 PREPUBLICATION COPY: UNCORRECTED PROOFS v

COMMITTEE ON ENSURING PATIENT ACCESS TO AFFORDABLE DRUG THERAPIES NORMAN AUGUSTINE (Chair), Former Chairman and CEO, Lockheed Martin Corporation JEFF BINGAMAN, Former U.S. Senator, New Mexico RENA CONTI, Associate Professor of Health Policy, Department of Pediatrics and the Department of Public Health Sciences, The University of Chicago STACIE DUSETZINA, Assistant Professor, Division of Pharmaceutical Outcomes and Policy, Eshelman School of Pharmacy, University of North Carolina at Chapel Hill MARTHA GAINES, Director, Center for Patient Partnerships; Distinguished Clinical Professor of Law, University of Wisconsin Law School REBEKAH GEE, Secretary, Louisiana Department of Health VICTORIA HALE, Founder and Former CEO, OneWorld Health and Medicines360 MICHELLE MELLO, Professor of Law, Stanford Law School; Professor of Health Research and Policy, Stanford University School of Medicine ELISEO PÉREZ-STABLE, Director, National Institute on Minority Health and Health Disparities, National Institutes of Health CHARLES PHELPS, University Professor and Provost Emeritus, University of Rochester MICHAEL ROSENBLATT, Chief Medical Officer, Flagship Pioneering; Former Chief Medical Officer and Executive Vice President, Merck & Co., Inc. DIANE ROWLAND, Executive Vice President, Henry J. Kaiser Family Foundation; Executive Director, Kaiser Commission on Medicaid and the Uninsured VINOD SAHNEY, Distinguished University Professor of Industrial Engineering and Operations Research, Northeastern University; Former Senior Vice President, Blue Cross Blue Shield of Massachusetts and Henry Ford Health System PETER SANDS, Research Fellow, Mossavar-Rahmani Center for Business and Government, Harvard Kennedy School; Research Fellow, Harvard Global Health Institute; Former CEO, Standard Chartered Bank PLC HENRI TERMEER,1 Former Chairman, President, and CEO, Genzyme Corporation REED TUCKSON, Managing Director, Tuckson Health Connections, LLC; Former Executive Vice President and Chief of Medical Affairs, UnitedHealth Group ALAN WEIL, Editor-in-Chief, Health Affairs; Vice President for Public Policy, Project HOPE Staff GURU MADHAVAN, Project Director FRANCIS AMANKWAH, Associate Program Officer SYLARA MARIE CRUZ, Senior Program Assistant DANIEL BEARSS, Senior Research Librarian REBECCA MORGAN, Senior Research Librarian PATRICK BURKE, Senior Financial Officer SHARYL NASS, Director, Board on Health Care Services 1 Deceased May 2017. NOTE: See Appendix F, Disclosure of Conflicts of Interest. PREPUBLICATION COPY: UNCORRECTED PROOFS vii

Fellows and Consultants JENNIE KWON, National Academy of Medicine Anniversary Fellow in Osteopathic Medicine; Assistant Professor, Washington University School of Medicine STEPHEN MERRILL, Technical Consultant; Executive Director, Center for Innovation Policy and Senior Fellow in Innovation and Entrepreneurship, Duke University School of Law ROBERT POOL, Editorial Consultant BRENDAN SALONER, National Academy of Medicine Greenwall Fellow in Bioethics; Assistant Professor, Johns Hopkins Bloomberg School of Public Health JONATHAN WATANABE, National Academy of Medicine Anniversary Fellow in Pharmacy; Associate Professor, University of California, San Diego, Skaggs School of Pharmacy and Pharmaceutical Sciences Executive Assistant to the Committee Chair LAURA AHLBERG, Lockheed Martin Corporation PREPUBLICATION COPY: UNCORRECTED PROOFS viii

Reviewers This Consensus Study Report was reviewed in draft form by individuals chosen for their diverse perspectives and technical expertise. The purpose of this independent review is to provide candid and critical comments that will assist the National Academies of Sciences, Engineering, and Medicine in making each published report as sound as possible and to ensure that it meets the institutional standards for quality, objectivity, evidence, and responsiveness to the study charge. The review comments and draft manuscript remain confidential to protect the integrity of the deliberative process. We thank the following individuals for their review of this report: Henry J. Aaron, The Brookings Institution Troyen Brennan, CVS Health Gail H. Cassell, Harvard Medical School and Brigham and Women’s Hospital Paul Citron, Formerly, Medtronic, Inc. Robert Cook-Deegan, Arizona State University Patricia M. Danzon, University of Pennsylvania David E. Housman, Massachusetts Institute of Technology Brent C. James, Intermountain Healthcare Bernard Lo, The Greenwall Foundation Mark McClellan, Duke University Jennifer E. Moore, Institute for Medicaid Innovation Neela Patel, Seattle Genetics William M. Sage, The University of Texas at Austin Nirav Shah, Kaiser Permanente, Southern California P. Roy Vagelos, Regeneron Pharmaceuticals, Inc., and formerly, Merck & Co., Inc. Gail R. Wilensky, Project HOPE Although the reviewers listed above provided many constructive comments and suggestions, they were not asked to endorse the conclusions or recommendations of this report nor did they see the final draft before its release. The review of this report was overseen by Harvey V. Fineberg of the Gordon and Betty Moore Foundation and Robert D. Reischauer of the Urban Institute. They were responsible for making certain that an independent examination of this report was carried out in accordance with the standards of the National Academies and that all review comments were carefully considered. Responsibility for the final content rests entirely with the authoring committee and the National Academies. PREPUBLICATION COPY: UNCORRECTED PROOFS ix

Contents SYNOPSIS 3 PREFACE 5 SUMMARY 15 1 THE AFFORDABILITY CONUNDRUM 23 The Microcosm of Prescription Medicines, 24 The Real Price of A “Priceless Good”, 27 A System of Conflicting Systems, 28 Market Forces, 29 Social Justice, 30 The Role and Responsibility of Firms, 31 Global Trade-offs, 34 Insurance Coverage, 35 The Study Context, 37 2 COMPLEXITY IN ACTION 39 The Three “R”s: Reasearch to Results and Returns, 39 The Market Structure, 46 Bargaining Power and Formulary Management, 52 The “Value” of Drugs, 57 Opacity in the Supply Chain, 62 Findings, 72 3 FACTORS INFLUENCING AFFORDABILITY 75 Product Pricing, 75 Price Regulation, 82 Research and Development Costs, 86 Product Promotion and Distribution, 88 Importation of Medicines, 94 Drug Shortages, 96 Waste and Cost Due to the Unused Drugs in the Supply Chain, 97 Insurance Design, 98 Patient Assistance Programs, 102 Federal Discount Programs, 103 Rare Diseases, 108 Other Influences, 109 Findings, 114 4 STRATEGIES TO IMPROVE AFFORDABILITY AND AVAILABILITY 117 Conclusion, 117 Recommendations, 117 A National Imperative, 122 REFERENCES 125 PREPUBLICATION COPY: UNCORRECTED PROOFS 1

MAKING MEDICINES AFFORDABLE 2 APPENDIXES A A DISSENTING VIEW 151 B A MINORITY PERSPECTIVE 165 C GLOSSARY 171 D STAKEHOLDER INPUT 177 E BIOGRAPHICAL INFORMATION 179 F DISCLOSURE OF CONFLICTS OF INTEREST 189 PREPUBLICATION COPY: UNCORRECTED PROOFS

Next: Synopsis »
Making Medicines Affordable: A National Imperative Get This Book
×
Buy Prepub | $67.00 Buy Paperback | $58.00
MyNAP members save 10% online.
Login or Register to save!
Download Free PDF

Thanks to remarkable advances in modern health care attributable to science, engineering, and medicine, it is now possible to cure or manage illnesses that were long deemed untreatable. At the same time, however, the United States is facing the vexing challenge of a seemingly uncontrolled rise in the cost of health care. Total medical expenditures are rapidly approaching 20 percent of the gross domestic product and are crowding out other priorities of national importance. The use of increasingly expensive prescription drugs is a significant part of this problem, making the cost of biopharmaceuticals a serious national concern with broad political implications. Especially with the highly visible and very large price increases for prescription drugs that have occurred in recent years, finding a way to make prescription medicines—and health care at large—more affordable for everyone has become a socioeconomic imperative.

Affordability is a complex function of factors, including not just the prices of the drugs themselves, but also the details of an individual’s insurance coverage and the number of medical conditions that an individual or family confronts. Therefore, any solution to the affordability issue will require considering all of these factors together. The current high and increasing costs of prescription drugs—coupled with the broader trends in overall health care costs—is unsustainable to society as a whole.

Making Medicines Affordable examines patient access to affordable and effective therapies, with emphasis on drug pricing, inflation in the cost of drugs, and insurance design. This report explores structural and policy factors influencing drug pricing, drug access programs, the emerging role of comparative effectiveness assessments in payment policies, changing finances of medical practice with regard to drug costs and reimbursement, and measures to prevent drug shortages and foster continued innovation in drug development. It makes recommendations for policy actions that could address drug price trends, improve patient access to affordable and effective treatments, and encourage innovations that address significant needs in health care.

  1. ×

    Welcome to OpenBook!

    You're looking at OpenBook, NAP.edu's online reading room since 1999. Based on feedback from you, our users, we've made some improvements that make it easier than ever to read thousands of publications on our website.

    Do you want to take a quick tour of the OpenBook's features?

    No Thanks Take a Tour »
  2. ×

    Show this book's table of contents, where you can jump to any chapter by name.

    « Back Next »
  3. ×

    ...or use these buttons to go back to the previous chapter or skip to the next one.

    « Back Next »
  4. ×

    Jump up to the previous page or down to the next one. Also, you can type in a page number and press Enter to go directly to that page in the book.

    « Back Next »
  5. ×

    To search the entire text of this book, type in your search term here and press Enter.

    « Back Next »
  6. ×

    Share a link to this book page on your preferred social network or via email.

    « Back Next »
  7. ×

    View our suggested citation for this chapter.

    « Back Next »
  8. ×

    Ready to take your reading offline? Click here to buy this book in print or download it as a free PDF, if available.

    « Back Next »
Stay Connected!