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CRF Blog » Blog Archive » Making Medicines Affordable

CRF Blog

Making Medicines Affordable

by Bill Hayes

The National Academies of Sciences, Engineering, and Medicine have issued a report on making medicines more affordable. You can download a PDF file of the full report here. Below is a summary of the recommendations taken from Highlights from Making Medicines Affordable: A National Imperative (PDF)

Consumer access to effective and affordable medicines is an imperative for public health, social equity, and economic development; however, this imperative is not being adequately served by the biopharmaceutical sector today. To approach the proper balance between affordability and future availability of medicines in the interest of public health, this report offers a set of eight specific recommendations, with interlinked implementation actions in the biopharmaceutical sector.

To read the supporting findings and the report’s recommendations directed at the U.S. Congress, federal agencies, and other participants in the biopharmaceutical sector, please visit

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.

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 such 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.

Current insurance benefit designs for prescription drugs often expose consumers to considerable financial risk and can unfavorably affect patients’ adherence to treatment regimens. 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 cost-sharing arrangements that are based on drug prices should be calculated as a fraction of net purchase prices rather than the list prices from manufacturers. Limits should also be placed on the total annual out-of-pocket costs paid by enrollees in Medicare plans that cover prescription drugs by removing the cost-sharing requirement for patients who reach the catastrophic coverage limit. The government should also tighten qualifications for discount programs that have drifted from their original intent to help vulnerable populations.

Financial incentives for the prevention and treatment of rare diseases should not be extended to widely sold drugs. Congress should revise the Orphan Drug Act to achieve its original intent, by ensuring that drugs with orphan designation receive benefits only for the target rare disease (and not other indications), and getting rid of unnecessary sub-categories that can create artificial eligibility for orphan drug status.

Finally, actions can be taken to increase available information and implement reimbursement incentives to more closely align prescribing practices of clinicians with treatment value. Specifically, payment policies should not differentiate among differing sites of care. Payment practices based on the list prices of drugs should be replaced with fixed fees that support clinical care and the costs of storing and administering drugs in outpatient clinics. [more PDF]

For free classroom lessons related to health-care reform, see “The Continuing Struggle for U.S. Health-Care Reform,” “The U.S. Supreme Court’s Decision on the Affordable Care Act,” and “Health Care: What Do Other Countries Do?” These lessons are available from our Bill of Rights in Action Archive. They are currently only in PDF and you will have to register (if you haven’t already), which is free.