Drug prices are once again a major focus of public policy in Washington D.C. President Trump has stated that reducing drug prices is one of his highest priorities.1 The administration recently issued new regulations requiring manufactures to list the price of their drugs in television ads. Congress has already passed the Know the Lowest Price Act and the Patient Right to Know Drug Prices Act, both of which try to promote transparency in prices.
The Senate Special Committee on Aging recently conducted a series of hearings on drug pricing. And the Senate’s bipartisan Prescription Drug Pricing Reduction Act would reduce government spending on drugs by an estimated $100 billion over the next decade.
This renewed attention is due to several factors. In a few cases, companies have dramatically raised the prices of specific drugs in order to generate more profits.6 Although these instances have been relatively rare, they have generated a great deal of publicity and comment. In other cases, new drugs have been introduced with large price tags. For instance, Novartis recently announced its new drug Zolgensma, which treats spinal muscular atrophy, will be priced at $2.1 million for a one-time therapy.
A large reason for the high cost is that relatively few people suffer from the disease and thus the cost of development must be spread over fewer patients. Finally, the rising cost of health care, including drugs, is placing greater pressure on individuals, insurers, and public budgets.
A recent report by Accenture revealed a $30 billion gap between the expected profits of drug companies from new drug launches and the projected drug spending of the public health programs in developed countries.8