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Avik Roy Proposes Drug Purchasing Clubs

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A longtime Republican health policy advisor has endorsed the idea of letting health insurers team up when negotiating prescription drug prices with the manufacturers.

Avik Roy, who is now the president of the Foundation for Research on Equal Opportunity, talked about the idea today, at a hearing on drug prices organized by the House Oversight and Government Reform Committee.

Roy previously was a senior fellow at the Manhattan Institute, an organization that promotes a market-based approach to public policy. He has served as a health policy advisor to Mitt Romney’s 2012 presidential campaign, to Rick Perry’s 2015 presidential campaign, and to Marco Rubio’s presidential campaign. He is also the opinion editor for Forbes Magazine and

Roy suggested during the hearing that drug manufacturers have what amounts to a monopoly, or near monopoly, on too many older drugs, such as colchicine, a drug for treating gout that was first discovered about 3,500 years ago.

Roy said in his written testimony that one way to fight the manufacturers’ pricing power would be to create an antitrust exemption that would let insurers join drug price negotiation coalitions.

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Switzerland already offers an antitrust safe harbor that lets all of the private insurers in a given region join together to negotiate with drug makers, Roy said.

“In this way, they can balance out the monopoly power of branded drugs, while maintaining a health care system that is, on balance, more market-oriented than America’s,” Roy said.

If Congress let insurers join together to negotiate drug prices, that “would limit the need and desirability of insurers to consolidate, because the primary rationale for consolidation is to level the playing field with providers and drug companies,” Roy said.

Roy also proposed that the United States make more use of personal health accounts, to give consumers more awareness of what drugs really cost, and that the federal government take a number of steps to increase competition among drug makers, such as encouraging drug makers to offer drugs that are similar to drugs already on the market.

Today, Roy said, because of a 1997 statute, the U.S. Food and Drug Administration discourages manufacturers from introducing alternatives to existing drugs, by offering a quicker approval process for drugs that address unmet medical needs and that treat serious or life-threatening conditions.

Congress could update that law to make a quick review process available to drugs developed for diseases where only one or two FDA-approved drugs are available, Roy said.


Roy talked about the idea of letting insurers join together to negotiate drug prices about three weeks after California’s new governor, Gavin Newsom, proposed establishing a single drug purchasing organization for all of California’s health programs.

Newsom, a Democrat, suggested that the California drug purchasing coalition could represent employers and private health insurers, as well as state health benefits agencies.


At press time, the House Oversight and Government Reform Committee had posted a copy of the hearing video that cut off the first part of hearing, including Avik Roy’s testimony.

The Illinois Channel, an Illinois version of C-SPAN, has posted a more complete recording of the here, on YouTube.

The official hearing page, which includes links to the written versions of the witnesses’ testimony, is available here.

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