Campus & Community

Healthcare Forum: What Can be Done to Control Drug Costs?

On Tuesday, April 7, the School of Business held an online healthcare forum on the subject of “Why do drugs cost so much in the United States? What can we do about it?” Originally to be held at the School of Business, the forum moved online when the University closed in response to the coronavirus pandemic.

The motivation for the forum was straightforward: Drugs cost more in the United States than any other developed country in the world. These high costs stretch public budgets and make it hard for patients to get the medications they need. The issue is complex. What can realistically be done — in law and policy — to better control drug costs?

The Center for Research in Health Policy and Management of the School of Business invited two of the nation’s leading drug policy experts to discuss this critical issue: Rena Conti, PhD, Associate Professor at Boston University; and Jonathan Darrow, PhD,  SJD, JD, MBA, LLM, Assistant Professor at Harvard Medical School.

In a program moderated by Professor of Practice Robert Coulam, PhD, JD, the two speakers differed slightly in their emphasis, but both emphasized that the “problem” of drug pricing was focused on a relatively few high-priced drugs — most drugs are generics, and competition in the market for generics helps control their costs. For branded drugs still on patent, the remedies are fundamental. Following the examples of France and Germany, the United States needs to:

  1. Independently evaluate the therapeutic value of drugs. Most new branded drugs have little additional therapeutic value; payers should be reluctant to cover them and should encourage therapeutic substitutes.
  2. Have the government negotiate directly with drug companies to establish prices commensurate with therapeutic value.

Finally, we need to recognize that intermediaries between the patient and the drug manufacturer (such as pharmacy benefit managers, hospitals, and insurance companies) make some profit from each dollar spent on prescription drugs. Controlling the profits of intermediaries will be vital for controlling drug prices.

Following presentations from the speakers at the forum, there was a robust question and answer session, involving the 90 online participants in an extended exchange.

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