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Synopsis Over the past several decades the biopharmaceutical sector in the United States has been very successful in developing and delivering effective drugs for improving health and fighting disease. Indeed, many medical conditions that were long deemed untreatable can now be cured or managed effectively. This success has come at a cost, however. Spending on prescription drugs has been rising dramatically, to the point that many individuals have difficulty paying for the drugs that they or their family members need. Drug costs are a significant part of the nationâs total spending on health care. This report, Making Medicines Affordable: A National Imperative, from the National Academies of Sciences, Engineering, and Medicine recommends several strategies to tackle the rising costs of prescription drugs without discouraging the development of new and more effective drugs for the future. This is a difficult challenge. There may be trade-offs between current drug affordability and new drug availability. Controlling drug costs too rigidly, for instance, could potentially reduce the expected profits of drug companies, and this could alter their decisions regarding major investments to develop new drugs. Furthermore, the complex nature of the nationâs medical systemâwhich includes patients, clinicians, hospitals, insurance companies, drug companies, pharmacists, pharmacy benefit managers, various government agencies, advocacy organizations, and many othersâ makes it very difficult to predict the precise effects of any specific policy changes. This is exacerbated by the fact that there is very little publicly available information on the costs and profitability for the drug companies and various other participants in the system. Nonetheless, there are a number of measures that can and should be taken to improve the affordability of prescription drugs for patients in the United States. The federal government should consolidate and apply its purchasing power to directly negotiate prices with the producers and suppliers of medicines, and strengthen formulary design and management. The government should also improve methods for assessing the value that drugs provide and also ensure that incentives to develop drugs for rare diseases are not extended to widely sold drugs. In addition, increased disclosure about the financial flows and profitability among the participants in the biopharmaceutical sector should be required. Actions to continually foster greater access to off-patent generic drugs, which are usually much less expensive than branded products, should be taken. One way this could be accomplished would be to prevent the common industry practices that delay entry of generics into the market and extend market exclusivity of branded products. Another critical step is to speed up the review processes that are required of manufacturers to produce generic drugs, to ensure healthy competition and lower costs. Also, various actions should be taken to eliminate incentives in the system that encourage clinicians and patients to prescribe or use more expensive drugs rather than less expensive alternatives that provide comparable results. One action would be to discourage direct-to- consumer advertisements for prescription drugs and to provide more useful information to patients about the potential benefits and costs of treatments, thereby reducing inappropriate demand for higher priced drugs. Finally, insurance plans should be modified to reduce the financial burden that patients and their families currently experience when they need costly prescription drugs, and individual PREPUBLICATION COPY: UNCORRECTED PROOFS 3
MAKING MEDICINES AFFORDABLE 4 cost-sharing arrangements that are based on drug prices should be calculated as a fraction of the net purchase prices of drugs rather than the list prices from manufacturers. The government should also tighten qualifications for discount programs that have drifted from their original intent to help vulnerable populations. Ongoing monitoring will be needed, but taking these steps should bring down the cost of prescription drugs while still enabling the continuing development of new drugs. PREPUBLICATION COPY: UNCORRECTED PROOFS