AARP and drug pricing

Published 10:30 am Tuesday, September 21, 2021

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By Jack Bernard

Bernard is a retired corporate executive

Americans can’t afford to pay more than three times what people in other countries pay for the same medicine”-EVP Nancy LeaMond, AARP, 9-21

AARP, the largest organization advocating for seniors, has come out very strongly for lower drug pricing. And I commend them for doing so. Our drugs are much more expensive than other nations, period. And have been for many years. 

Sure, drug companies need to do research and development, but why is the US the only nation paying for it through higher drug prices? Why are Americans subsidizing both American and foreign pharmaceutical companies while Europe and other developed nations spend a fraction of what we do on drugs? Via the US prohibition on Medicare negotiating prices and similar legislation, the US government is very directly driving down pharmaceutical prices for citizens of other nations, but not ours.

Let me give you a specific pricing example. I worked as a VP for the largest for-profit healthcare group purchasing (GPO) corporations in the US. We contracted for billions of dollars in drugs for over nearly 2000 hospitals. As the VP of Development, the price comparison reports went to me. Savings were in the 10%-20% range versus what even the largest hospitals could get on their own.

Imagine my surprise when I started doing business in Canada with the hospital associations of the four western most Provinces. Multiple analytical reports showed their prices to be significantly lower than ours for the exact same drugs, even though they were buying far fewer pharmaceuticals than we were.

In fact, the Canadian hospital execs were not at all surprised about this … or any other negative aspects of US healthcare. Their uniform opinion was that our disjointed, fragmented, multi-payer, politically damaged healthcare system was generally much worse than their efficient single payer system. Objectively, the data shows them to be correct.

Along these lines, I would advise all Americans to review the Biden/ DHHS plan to reduce drug costs which lays out specific actions that must be taken. For example, permitting Medicare to negotiate drug pricing for seniors (like all other payers now do) and limiting other non-competitive politically oriented prohibitions in our laws… placed there solely due to the influence of Big Pharma and its lobbyists.

If you believe in the free enterprise system, contact your legislators to let them know that the US should not be engaging in corporate welfare for drug companies. And it is up to our Congress to pass laws enabling the free market to rein in drug pricing.