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Life Health > Health Insurance

Drug makers to tell NAIC their side of the story

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The Pharmaceutical Research and Manufacturers of America is telling state insurance regulators that U.S. drug spending is stable, that drugs provide a high level of value, and that big, quick advances in drug research are just about the country’s only hope of dealing with the cost of aging-related illness.

Related: Health cost fight boils over

Robert Zirkelbach, a PhRMA executive who in 2014 moved to the Washington-based trade group from another Washington-based trade group, America’s Health Insurance Plans, makes those points in a new slidedeck. Zirkelbach prepared the slidedeck for a panel discussion about drug prices set to take place Sunday in Miami Beach, Florida, at the fall meeting of the Kansas City-based National Association of Insurance Commissioners.

Zirkelbach may face a tough crowd in Miami Beach.

Both Republican and Democratic presidential contenders have been blasting PhRMA’s members. President-elect Donald Trump says U.S. drug makers should face more competition from non-U.S. makers. Congress has called witnesses from PhRMA to Capitol Hill for hearings on matters such as the high price of the newest anti-cholesterol drugs and the skyrocketing cost of the EpiPen devices used to protect people from severe, airway-constricting allergic reactions. 

Zirkelbach says in his slidedeck that one problem is that the list prices that show up in news stories are different from what insurers really pay.

In 2015, for example, drug list prices increased an average of 12.4 percent, but the net, discounted prices insurers really paid increased just 2.8 percent, Zirkelbach says.

U.S. drug inventers can get 20 years of patent protection for new drugs. But, in the real world, Zirkelbach says, a brand-name drug usually faces competition from another brand-name drug within an average of 2.3 years.

PhRMA tested the power of U.S. insurers’ pharmacy benefit manager programs by looking at the average net prices of the expensive new hepatitis C drugs in the United States and six other rich countries. Italy was the only countries studied in which the new hepatitis C drugs were cheaper than in the United States, Zirkelbach says.

Zirkelbach says letting drug companies generate enough revenue to support drug research efforts is critical, because the main hope the world has of controlling the cost of aging-related illnesses is drug research.

He cites an analysis from the Chicago-based Alzheimer’s Association suggesting that, if the United States had a drug available in 2025 that could delay the onset of Alzheimer’s disease by an average of five years, that could save the country about $367 billion in Medicare, Medicaid, private insurer and out-of-pocket costs in 2050 alone.

PhRMA believes that any efforts to hold down drug spending should involve market-based programs for promoting high-value health care, and giving patients choices, rather than one-size-fits-all arrangements that limit patients’ choices, Zirkelbach says.


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