How government price setting fails to address systemic health care inequities

Lowering prescription drug costs for patients and making access to medicines more equitable are two important priorities for America’s biopharmaceutical research companies. That’s one of many reasons why we have concerns with government price setting proposals. Whether in the form of state pricing boards or the Inflation Reduction Act, government price setting doesn’t address structural barriers to care, and in fact, studies reveal that it risks making existing barriers worse.

The details: There are several reasons why inequities persist in America’s health care system, including insurance practices like high deductibles and narrow formularies, access barriers to trusted health care providers and structural racism that often drive social determinants of health. There are different ways government price setting risks making these inequities worse, including:

• Devaluing diversity: Metrics like the Quality Adjusted Life Year (QALY), often used by governments involved in price setting, devalue the lives of underserved patients – including those from communities of color. For example, a lifesaving treatment for Black patients can be valued up to 10% less than it is for white patients using metrics such as the QALY.
  
  
• Diminishing the R&D pipeline: Price-setting policies could reduce incentives for investment in research and development, impacting a wide array of therapeutic areas and affecting work to combat diseases and conditions that disproportionally impact Black and Brown populations. Research shows that IRA price-setting policies already have this negative effect.

Driving greater health equity requires ending discriminatory tactics that drive up costs and making insurance work like insurance again. That includes addressing insurance and middlemen abuses, ending exorbitant fees these entities tie to the price of medicines and the steering of patients to pharmacies that deliver higher profits. Insurers and middlemen should also have to share negotiated savings directly with patients, which could reduce total health care costs by as much as $1,000 per person each year.

Bottom line: Government price setting fails to address systemic inequities that plague our health care system. State and federal lawmakers should instead pursue a patient-centered approach to improve access, affordability, and the patient experience throughout our health care system.

Download the fact sheet here and learn more at PhRMA.org/States and PhRMA.org/Equity/SDOHandMedicines