Running Head: PRESCRIPTION DRUG PRICING REDUCTION ACT OF 2019 1

Prescription Drug Pricing Reduction Act of 2019

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PRESCRIPTION DRUG PRICING REDUCTION ACT OF 2019 2

Name of Policy S.2543, Prescription Drug Pricing Reduction Act of 2019

Pharmaceutical firms have a crucial role as in the lives of millions of

American lives as they innovate and create drugs that improve as well as save

their lives. However, as pointed out by Vincent Rajkumar (2020), considering

drugs have become too expensive for most Americans, these drugs end up not

helping the people they were meant to help. The Prescription Drug Pricing

Reduction Act (PDPRA) of 2019 illustrates that every industry can be held

accountable. The legislation aims to address a wide range issues with

prescription medicine markets as well as coverage that typically impact

Medicare and people who benefit from it. The Legislation does so by focusing

on reducing the prices of prescription drugs, refining the value design of the

outpatient prescription drug benefit of Medicare (Part D), as well as

eradicating numerous inhibitions to competition. The impact of the legislation

on the prices of prescription drugs is mostly indirect. PDPRA aims to create

stronger incentives for Americans thus allowing them manage the costs of

drugs throughout the Medicare Part D benefit phases. Consequently, Part D

plans are forced to be more efficient in their drug spending management and

pricing negotiations, hence, leading to a decrease in drug prices.

Policy Level Federal

Reference Leve Key Findings

Review of Evidence l
(Kesselheim, 1 The research conducted by Kesselheim, Avorn,

Avorn, & & Sarpatwari (2016) found that in the U.S., the
PRESCRIPTION DRUG PRICING REDUCTION ACT OF 2019 3

Sarpatwari, 2016) per capita spending in prescription drugs

typically exceed those in all other nations

globally. According to the research, the brand-

name prices of drugs have recently been

increasing at rates that are well beyond the

consumer price index. As a result, this has

caused the huge per capita spending in the U.S.

relative to other countries. The Study further

established that about 17% of the entire

personal health care services in the U.S. are

made up of the prescription drugs. Avorn, &

Sarpatwari (2016) hold that patents and

monopoly rights given after approval by the

Food and Drug Administration results in market

exclusivity, allowing drug manufacturers to set

drug prices as high as possible.

(Gronde, Groot, 1 This study found that the patent drug markets in

and Pieters, 2017) the U.S. are considerably impacted by the

changes in the life cycles of drugs, which is a

self-sustainable as well as self-evident income

sources for most highly profitable drug firms in

the U.S. Moreover, acquisition and mergers

together with failure of the market have

facilitated increase in price for the off-patent

PRESCRIPTION DRUG PRICING REDUCTION ACT OF 2019 4

prescription drugs. In recent years, the U.S.

government have attempted to influence the

prices of drugs with no luck since there are

interventions of the markets as well as QALY

measures introduction in health care.

(Vincent 1 According to the findings of this article, the

Rajkumar, 2020) rising costs of prescription medicines pose a

threat to healthcare budgets as well as limiting

the money available to invest in other areas. The

study hold that because healthcare in the U.S. is

not Universal, high prices of prescription drugs

are a threat to patients who cannot afford the

out-of-pocket prices. The high out-of-pocket

prices prevent over 20% of the Americans from

buying Precription medications. The article

found out that a majority of companies justify

the high prices of drugs with the need to sustain

innovation. However, as pointed out by Vincent

Rajkumar (2020), setting high high prices for

every drug by these companies consequently

slows down the innovation pace as people

cannot afford them.

Evidence Synthesis The researchers exploring the causes of high prices of prescription drugs in
PRESCRIPTION DRUG PRICING REDUCTION ACT OF 2019 5

the U.S. found that the ability of the drug manufacturing companies to set

prices as they have patent and monopoly rights is the major cause of these

high prices. The studies determined that despite drug development being an

expensive process, evidence does not exist to support the relationship between

the high drug prices and the costs of research and development of these drugs.

In the united states, pricing of the prescription medication is based on the

nature of the market. The strength of all these studies is their ability to point

out the inability of medicare to negotiate drug prices. The 2003 Meidcare

modernization Act that established the part D benefit has a noninterference

clause prohibiting the government from interfering with negotiation between

pharmacies, PDP sponsors, and drug manufacturers. However, their main

limitation is their failure to provide a concrete alternative solution to this

problem other than the ones provided by the Prescription Drug Pricing

Reduction Act of 2019.

Comparison of All the three researches found that the most encouraging short-term policy that

Evidence to Current could solve the problem of high prices of prescription drugs include pricing

Policy that is outcome-based, encouraging pharmacists and doctors to prescribe low-

cost medication, patent reform legislation, and reference pricing. The

Prescription Drug Pricing Reduction Act of 2019 does not suggest these

solution. However, it offers reduction in the prices of prescription drugs by

refining the value design of the outpatient prescription drug benefit of

Medicare (Part D), as well as eradicating numerous inhibitions to competition.

Recommended For particular high cost drugs of Medicare part D and B, the prescription Drug

Evidence-Based Pricing Reduction Act of 2019 should use international prices of prescription
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Policy Revisions drugs for countries that have the most favorable drug pricing models. As

pointed out in the studies, evidence does not exist to support the relationship

between the high drug prices and the costs of research and development of

these drugs. Therefore, by using international reference pricing to help set the

prices for certain drugs, this will consequently ease the burden of high prices

of prescription drugs for many Americans. Additionally, the legislation should

allow the government to raise taxes on drug manufacturing firms that do not

agree to medication prices with the federal government.

PRESCRIPTION DRUG PRICING REDUCTION ACT OF 2019 7

References

Kesselheim, A., Avorn, J., & Sarpatwari, A. (2016). The High Cost of Prescription Drugs in the

United States. JAMA, 316(8), 858. https://doi.org/10.1001/jama.2016.11237

Gronde, V.T., Groot, U.A.C., and Pieters, T. (2017). Addressing the challenge of high-priced

prescription drugs in the era of precision medicine: A systematic review of drug life

cycles, therapeutic drug markets and regulatory frameworks. PLoS One. 12(8): e0182613.

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5559086/

Vincent Rajkumar, S. (2020). The high cost of prescription drugs: causes and solutions. Blood

Cancer J. 10, 71. https://doi.org/10.1038/s41408-020-0338-x