To address the critical risks posed to patients from chronic shortages and rising prices of life-saving generic medications, three national foundations committed $30 million to help establish Civica Rx, a new not-for-profit generic drug company. The Laura and John Arnold Foundation, the Peterson Center on Healthcare and the Gary and Mary West Foundation each committed $10 million, joining seven large U.S. hospital systems representing approximately 500 U.S. hospitals as governing members of Civica Rx. The formation of Civica Rx was announced earlier today.
Today, the prices of healthcare services—physicians, hospitals and prescription drugs—are at unprecedented levels, creating barriers to access for individuals who need care. Addressing the excessive prices of prescription drugs provides the most immediate opportunity for some relief of exorbitant healthcare prices overall.
Prescription drug prices continue to increase much more rapidly than inflation, resulting in an expected growth in spending of 6.3 percent annually. And although the drivers of high prescription drug pricing are complex, several feasible policy solutions would begin to rebalance incentives for innovation and price competition, and prioritize patient access and affordability.
As the largest purchaser of prescription drugs in the country, Medicare has the purchasing leverage to negotiate with manufacturers on prescription drug prices to get the best deal for patients and the federal government. Nearly 60 million seniors and people with disabilities access prescription drug coverage through Medicare. Prescription drugs account for $1 out of every $6 in Medicare spending, and Medicare accounts for close to 30 percent of the total prescription drug spending in the country. Americans across the political spectrum overwhelmingly support (at a rate of approximately 90 percent) allowing the federal government to negotiate prescription drug prices for people covered by Medicare.
The U.S. should also seek to reduce prices overall through competition, by supporting competition in the generic and biosimilar industry; eliminating anti-competitive behaviors by some brand-name manufacturers that block or delay competition; testing new reimbursement models that promote value, such as outcomes-based purchasing; investing in comparative effectiveness research and its dissemination to understand the value of individual prescription drugs; and allowing states responsible flexibility to test innovative models for purchasing prescription drugs.
The high price of prescription drugs is a top concern for Americans. We need to continue the national dialogue and engagement around lowering prescription drug prices to keep it in the public consciousness.
Three common sense reforms – allowing Medicare to directly negotiate prescription drug prices with drug companies, accelerating the move to a value-based care system and requiring greater price transparency – are key to lowering healthcare costs and improving health outcomes. West Health, a family of nonprofit and nonpartisan organizations that spans research, policy and philanthropy, will convene major figures from the worlds of healthcare, business, policy and media for a national summit on how to best drive these reforms to create a system that is more transparent, competitive, affordable, person-centered, quality-driven and sustainable.
The rising cost of healthcare is a growing and major threat to our economy, our financial security and our individual health. For too long, we’ve been paying too much and not getting enough in return. The U.S. healthcare system is on an unsustainable cost trajectory. We have an urgent need to address this cost crisis so that healthcare can become more accessible and more affordable for all Americans. Now is the time.
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