Americans from coast to coast disagree about plenty of issues. As a U.S. senator, I know at least one issue that unites all Americans: Drug prices are too high.
The soaring cost of prescription medicine has struck a nonpartisan nerve. Sticker shock is hitting consumers at the pharmacy counter and socking it to taxpayers who foot the bill for government health programs. While most Americans agree the U.S. healthcare system provides the most innovative cures and quality care available in the world, they also know the delivery system is too complex, too secretive, too confusing and too expensive.
Complicated formulas along the pharmaceutical supply chain let drug manufacturers, wholesalers, retailers and pharmacy benefit managers hide behind a thicket of obscure payment arrangements to bilk public health insurance programs, including Medicaid.
As a federal policymaker, it’s my job to make sure taxpayer-financed programs work as effectively and efficiently as possible. The Senate Finance Committee has held hearings this year to examine why drug prices keep rising. Since day one of the 116th Congress, I have been working to forge bipartisan solutions that would drive prices down without compromising innovation and quality.
Unlike medical breakthroughs that have wiped out childhood diseases, there’s no miracle cure to reduce prescription drug prices. Unlike what some presidential candidates are promising on the campaign trail, there’s no such thing as “free” healthcare.
First things first. Let’s fix what’s broken. After examining Medicaid’s drug-pricing structure, it’s clear the status quo must go. It’s creating unfair payment disparities and putting taxpayers on the hook for inflated costs.
A strong dose of transparency would help eliminate practices that allow players in the supply chain to game the system at taxpayer expense. Consider a practice known as spread-pricing. This occurs when PBMs buy drugs from wholesalers at one price and sell to pharmacists at an inflated price. The existing contracts show that the difference is especially egregious for generic drugs, with PBMs pocketing the difference and making a killing off of taxpayers and programs to support the low-income members of our communities.
Injecting a dose of common sense into the Medicaid payment system will help drive up value for the taxpayer and improve quality for the beneficiary. Transparency brings accountability. What I’ve learned so far confirms reforms are needed. Spread-pricing games the federal-state Medicaid system, fleeces taxpayers and squeezes independent retailers to the brink of their business.