OF ALL the ways to avoid high drug prices, the wackiest come from the unlikely duo of Donald Trump and Bernie Sanders. They’re encouraging patients to flock north to Canada and buy up all their “cheap” drugs. On a small scale, this could make sense.
Last year, three million Americans bought at least one drug from Canada according to Consumer Reports. But try to imagine the chaos if all Americans went that route. According to WebMD, 55% of Americans regularly take at least one Rx drug. That works out to about 170 million Americans shopping for drugs in Canada. Never happen, right? But what if only 20% of Americans decided to go the mail order route? According to The Wall Street Journal, Canada would run out of drugs in 200 days.
The poster drug for buying from Canada is insulin — which is a problem for many people with diabetes because for uninsured patients, the cost is as high as $400 a month. The knee-jerk reaction from politicians like Bernie Sanders (and increasingly from some on the right as well) is that the price of insulin is just another example of pharma greed.
Many lawmakers don’t understand that insulin isn’t a drug like Prozac or Viagra that can be churned out as a generic once its patent has expired. It’s a biologic, originally taken from animals and now produced by genetically engineered microbes. In accordance with FDA regulations, any new insulin must be shown safe and effective in clinical trials. Thus, bringing a new “cheap” insulin to market is untenable. At the same time, buying insulin from abroad is a bit dicey. As described in a recent book Bottle of Lies by Katherine Eban, regulatory oversight of generic manufacturers located in India and China is unreliable at best.
Another “solution” being proposed by Democrats and Republicans consists of either penalizing companies for prices deemed excessive or, more simply, imposing price controls. After a drug is launched, the government would mandate that any future price increase cannot exceed the rate of inflation. Let’s think about this regulation as if it were presented in a business administration quiz. Ready?
Question 1: Under this policy, would you launch a new drug at: A) the highest possible price or B) a modest, competitive price? Question 2: Would you subsequently A) increase prices at every opportunity as permitted by law or B) keep prices constant unless prompted by increased manufacturing costs?
But what if only 20% of Americans decided to go the mail order route? According to The Wall Street Journal, Canada would run out of drugs in 200 days.
If you answered B to either or both questions, you may have a career in politics in your future but stay clear of business. Pegging prices to inflation is a sure way to start and keep them high.
Author Lisa Gill’s article in the August issue of Consumer Reports offers a viable alternative. Although CR is known for rating appliances, Gill offers practical alternatives to traveling to Canada or petitioning Congress.
One possibility is checking for drug manufacturer discounts. These vary from company to company and may offset insurance co-pays. Alternatively, some patient assistance programs are tailored for individuals who are not covered by insurance. Many pharmacies have their own discount programs. It can’t hurt to ask.
Isn’t it reassuring that at a time when politicians on both sides of the aisle are suggesting lousy ideas for lowering drug prices, we still have a few sane voices explaining how to find real help?
Sander Flaum is principal, Flaum Navigators.