Trump assertions of lower drug costs mask truth for many consumers

As more insurance plans have high out-of-pocket costs, some consumers are paying more, and the uninsured haven’t gotten much help at all

House Democrats chant, “HR 3” and hold up their hands with three fingers extended, a reference to their bill on prescription drug prices, during President Donald Trump’s State of the Union Address on Feb. 4, 2020. (Caroline Brehman/CQ Roll Call)
House Democrats chant, “HR 3” and hold up their hands with three fingers extended, a reference to their bill on prescription drug prices, during President Donald Trump’s State of the Union Address on Feb. 4, 2020. (Caroline Brehman/CQ Roll Call)
Posted September 9, 2020 at 6:00am

President Donald Trump campaigns on the message that he’s done more to lower drug prices than any other president, but the reality is more complicated.

The administration contends that drug prices are rising at a slower pace after years of hikes, while research supports the idea that increases for brand-name drugs have moderated. 

But that doesn’t tell the full story. The most significant proposals in Congress to drive down prices stalled because of partisan differences and industry opposition. Brand-name drugs are launching at higher prices than in past decades, and their prices continue to increase.

The costs for most generic drugs, which make up the vast majority of prescriptions filled in the United States, have been falling. Yet even when the average price declines or rises at lower rates, the out-of-pocket costs for some individuals continue to climb.

Overall, drug spending keeps going up, and at this point it’s debatable whether the administration deserves credit for any positive trends. 

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“Any changes that are observed over the last four years would be due to pressure at the state level, changes imposed by payers, or due to other evolutions of the marketplace, and would have no relationship to the current administration,” said Aaron Kesselheim, a Harvard Medical School professor who studies drug prices.

Lowering prescription drug prices was one of the few shared goals of the White House and Democrats in Congress since Trump took office, offering an opportunity for a bipartisan win that went largely unfulfilled. Trump had promised that the United States would match lower prices abroad. House Democrats passed a bill with similar goals, which would have penalized price increases. A bipartisan Senate proposal would have slowed Medicare drug spending and limited seniors’ costs. 

The biggest changes were instead modest steps on generic drugs, with the administration trying to spur competition and Congress enacting a law meant to stop an anti-competitive practice that has blocked generic competition. 

Some experts say it’s possible that policy changes affecting competition saved some people money. At the same time, since a growing number of insurance plans have high out-of-pocket costs, even if the average prescription costs less, some consumers are paying more, including for generics. And uninsured people haven’t gotten much help at all. 

Focusing on averages “masks what’s happening for people who take really high-cost medications, or people who take medication like insulin where the prices keep going up,” said Juliette Cubanski, deputy director of the program on Medicare policy at the nonpartisan Kaiser Family Foundation.

High-level data doesn’t necessarily reflect the experiences of people like Clayton McCook, an Oklahoma veterinarian who specializes in care for horses. His 12-year-old daughter has Type 1 diabetes. Since his family is on a high-deductible health insurance plan, they pay full price, around $300, for her insulin vials until a $3,000 individual deductible has been met. 

The cost of her insulin, Novolog, more than tripled over the past 20 years.

“There’s been no substantive change in policy that has affected our family’s finances in a beneficial way,” he said. 

Recent growth 

Average brand-name drug prices have increased in recent years, though perhaps not as much as would be expected. The net price for branded drugs, after discounts, grew 1.7 percent on average annually from 2015 to 2019, about the same as the 1.8 percent average rate of inflation during that period, according to the research firm IQVIA. 

The “list price” for branded products, before discounts, grew at an average 7.2 percent per year during that time, dropping from 9.3 percent in 2016 to 5.2 percent in 2019. 

University of Pittsburgh researchers similarly found that net prices stayed fairly stable from 2015 to 2018. 

From 2007 to 2018, net prices rose 4.5 percent on average, said the researchers’ Journal of the American Medical Association study. 

Brand list prices increased 9.1 percent a year from 2007 to 2018, they found, with the highest double-digit growth from 2012 through 2014.

While net prices might be important for assessing overall spending trends, list prices affect in particular the uninsured and insured with plans that have cost-sharing obligations based on a percentage of the list price. 

For generic drugs, prices tend to be falling, according to the research firm 46Brooklyn, which analyzes federal drug price data. But there are enough price increases among generic drugs that at times they nearly offset those with falling prices. And some months, more prices are rising than falling.

Murray Aitken, executive director of the IQVIA Institute for Human Data Science, attributes the moderating trend to several factors. There is more competition, not just from generics but also from new medicines. That’s something the Food and Drug Administration under Trump tried to foster. Private sector factors also have a lot to do with it, he said, since insurers are paying more attention to whether a drug is worth the price and may be more aggressive in negotiations, willing to exclude drugs from coverage. 

The attention from Trump and Congress likely helped, he said. 

“I think we’ve also seen manufacturers respond to the public scrutiny that they are under and certainly pulled down at least their list prices, in terms of the level of annual increases, since that has been getting a lot more visibility in the past few years,” he said.

Another reason price increases may be moderating is that drugs are launching at higher prices to begin with, according to a 46Brooklyn analysis

That trend disproportionately affected certain patients — such as those who pay a percentage of a drug’s price and have conditions with costly treatments, like cancer or rheumatoid arthritis — even as the average person might not feel the higher prices. 

Effect on consumers, taxpayers 

For people with insurance, the average prescription cost hasn’t changed dramatically, rising from $10.34 in 2015 and $10.67 in 2019, according to IQVIA. 

But it’s a different story for the uninsured, as the average brand prescription price jumped from $93.62 to $105.74 and the average generic prescription spiked from $27.25 to $43.67. 

The number of Americans without insurance fell from nearly 47.2 million when the 2010 health care law was signed, according to Census Bureau data, to 27.3 million in 2016. But it ticked up during the Trump administration, with around a million more uninsured by 2018. The number could grow because of the historic levels of unemployment caused by the COVID-19 pandemic. 

Some of the insured also face higher costs because of plans that expose them to list prices of drugs before coverage kicks in. The increasing prevalence of high-deductible health plans caused average deductibles to almost triple in 2018 compared with a decade earlier. 

The commercial insurance market trends mirror those for seniors on Medicare’s prescription drug benefit, Part D, said the Kaiser Family Foundation’s Cubanski. Even though out-of-pocket spending overall has been fairly flat for seniors because of generic drugs, she said, Part D usually requires customers to pay a percentage of a drug’s price, meaning the new treatments with higher launch prices are a big concern. 

Although the median cost-sharing payment for brand drugs in Part D plans is $42, a growing number of drugs require payments of up to 50 percent of a drug’s cost, according to the Kaiser Family Foundation.  

That burden is felt not only by seniors. The government also pays a disproportionate amount for the priciest drugs, something policymakers have tried to address. At the start of 2018, Congress enacted a law that lowered how much seniors whose drug costs run up into the thousands of dollars pay. But an effort by Senate Finance Chairman Charles E. Grassley, R-Iowa, to cap seniors’ out-of-pocket costs, and save billions for taxpayers, sputtered.

Because more people are vulnerable to the steep list prices, patients are less likely to take their medicine and risk falling into poorer health — potentially driving up overall health care spending. 

“You have a lot of prescription abandonment, especially around the first of the year, when essentially they reset the clock,” said Antonio Ciaccia, 46Brooklyn’s chief executive. “But there are massive costs to the overall system that occur as a result.” 

The costs to the overall system are paid by taxpayers and patients through higher premiums. 

“It’s definitely gotten worse,” said McCook. “It’s no shock that premiums go up, deductibles go up, when these costs continue to rise. Until we have the costs under control — and that very much includes pharmaceuticals — then it’s going to continue to get worse for people.”