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Town Hall on Drug Pricing Legislation – A Recap

Last week’s town hall focused on the Elijah E. Cummings Lower Drug Costs Now Act, HR-3. Our special guest was former Vermont governor, presidential candidate and physician, Howard Dean. Governor Dean is a Democrat but is also a fiscal moderate. We thought his perspective would be important as we consider the many proposed changes to our prescription drug program.

Governor Dean gave his initial remarks stating that he thinks something needs to be done about drug prices. He thought HR-3 was a well-intentioned bill but maybe didn’t have all the right solutions. He stated that, in his opinion, we should have first dollar coverage in Medicare, even if it resulted in higher premiums. He pointed out that our present system pays only when you get sick rather than paying for not getting sick. He pointed out that all facets of healthcare have gone up 15% a year. He said that getting healthcare was not like buying a car, we don’t have the opportunity to buy a Cadillac or a Ford; our doctor tells us what healthcare we need whether we can afford it or not.

He talked about the part of HR-3 that directed that we base our drug prices on what other countries pay. He agrees that it is unfair for the United States to foot the bill for all the research and development of new medicines, but the HR-3 approach wasn’t the answer. He stated that this really is a serious trade issue, and it’s like they have to put a tariff on our drugs, but we must be careful how we go about solving this problem.

Politicians like to have villains and the drug companies are easy targets. He pointed out that healthcare innovation is one of a shrinking number of places that the United States is the world leader. It was no accident that the first and highly successful COVID-19 vaccines were produced by American companies. He said that taking away the intellectual property rights of drug manufacturers would not get one dose of the vaccine overseas any quicker.

He talked about, what he labeled, a pretty controversial solution – having drug and procedural solutions compete. He pointed out that years ago when he was practicing medicine a heart attack patient would spend 14 days in the hospital and now that same patient spends 3 days. He said this was because of the advancement in drugs in this arena.

He wants to bring drug prices down, but he does object to simply punishing the drug companies because they are drug companies. We cannot cripple these industries.

He ended his preliminary remarks and opened the town hall up for questions.

At this point I commented that America has this huge pharmaceutical manufacturing asset that we should work hard to preserve. I pointed out that when Part D was implemented, hospital visits were reduced. These savings are often not recognized. I continued on, pointing out that Medicare Advantage is a program that helps keeps us healthy rather than waiting for us to get sick.

Governor Dean talked about the Bayh/Dole Act and how it tripled patents in its first year. He commented that the best way to stifle innovation was to have the government control everything. He said having first dollar coverage on Medicare was much better than the government controlling prices.

I interjected that these other countries used QALYs (quality-adjusted life year) to ration healthcare, something that we don’t want to have invade our healthcare system.

Governor Dean said we should get rid of fee-for-service medicine entirely, bypass the insurance companies and go to a simple premium paid to hospitals system. They would control the healthcare for each patient making them more apt to worry about the health of their clients.

[This is an area where I disagree with Governor Dean’s solution. What he is describing is a Medicare Advantage system for healthcare or a capitated system, like an HMO, where the provider gets one amount for each patient, regardless of the level of treatments the patient receives but letting the hospitals control the premiums and management. This would give the hospitals control of virtually the entire healthcare system. If you bypass the insurance companies, you eliminate the competition and the oversight the insurance companies provide. This competition is the reason that premiums remain low and Medicare Advantage is successful – I can attest to its success as I have experienced both types of insurance and I am most satisfied with my Medicare Advantage program.]

I commented that no matter who is treating us or providing products, doctors, hospitals, medical device manufacturers or drug companies, if their prices are out of line then they should come under review.

Dean again reiterated that there should be no co-payments and I highlighted the fact that HR-3 was focused on how the healthcare system is today and that one way that it focused on limiting out-of-pocket costs was to set a cap on yearly drug costs.

Then someone asked the Governor if he thought that using trade negotiations was enough to get other countries to pay their fair share of research and development costs and if he thought prior administrations had done enough in this area. Governor Dean answered that he thought that trade negotiations were realistic, and he didn’t think prior administrations had done anything in this area. He thought these trade negotiations should be part of the broad negotiations we have.

The next question focused on whether there was a way to limit drug prices but still give the upstart drug companies something to offset the attacks on intellectual property (IP). Governor Dean suggested that if there was even pricing worldwide it would offer the return necessary to maintain innovation. Shortening the patent life was not the solution. He pointed out the number of high salaried jobs are in America as a result of the drug companies. He said that whole industry shouldn’t be punished for a few bad players (he referenced Martin Shkreli). He stated that we shouldn’t attack IP unless there was clear price abuse.

A question came from the Q&A chat box. . . do you expect any other proposals to lower drug prices coming forth this year? He said yes but doesn’t expect anything to get passed since Washington is so divided.

Next question, will there be some other healthcare legislation that will make it to President Biden’s desk?

He pointed out that President Biden has already expanded Obamacare but did this by executive order and that it is much harder to get legislation through. I pointed out that a small thing like smoothing out yearly out-of-pocket payments has bipartisan approval and should be done. The Governor agreed. Governor Dean said that smoothing out of pocket payments would directly help the beneficiary which is an important focus but only if the person could afford the payment in the first place. He said that he liked working with HMOs when he was practicing medicine. He said he liked the coordination of care but also on the focus on preventative care and railed again against the perverse incentives that exist that drives the providers to more procedures.

In response to a question about why his perspective on HR-3 differed from his Democratic colleagues Governor Dean said that he knew what it was like to practice medicine and treating the drug companies as the enemy was not the solution. He said politicians should decide on solutions, not just consider things that will make their constituents mad so they will go out and vote for them.

We then had some final comments:

I said that we need to work together to come up with solutions and that there is no better place that I know of to spend my money than to keep me and my family healthy.

Governor Dean said he was glad to have this time to talk about healthcare and said that he does think something needs to be done about drug prices but, when we consider changes, we shouldn’t do them out of anger but out of careful consideration of the facts.