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One of the panelists, scientist Mariana Socal, cited that about one in four Americans have trouble affording drugs. Credit: Jesse Zhang

Penn’s Leonard Davis Institute of Health Economics hosted a virtual seminar in which panelists discussed high drug prices and possibilities for reform in the present political climate.

The seminar, entitled "Drug Pricing: Policy and Politics," featured American Enterprise Institute senior fellow Benedic Ippolito, Washington University law professor Rachel Sachs, and Johns Hopkins Bloomberg School of Public Health scientist Mariana Socal. The event was moderated by Perelman School of Medicine and Wharton School professor Rachel Werner on Friday.

The speakers began the discussion by agreeing that although there is an extraordinary need for high drug prices to be addressed in the United States, reforms have stagnated and been insufficient for years. Socal cited the statistic that about one in four Americans have trouble affording medicines and about three in 10 Americans who take prescription drugs have reported they have not taken a prescribed drug as recommended due to the cost. 

Sachs placed the current drug pricing reform efforts into three categories: proposals addressing high out-of-pocket drug costs, proposals discouraging financial incentives for pharmaceutical companies, and policies addressing the underlying high prices of drugs. 

In the political realm, Ippolito said two main issue areas need to be addressed: people with a condition with available treatment who need drug prices reduced, and people with a condition without available treatment who need treatments to be invented. This forces politicians to prioritize and balance addressing both issues, Ippolito said. 

Ippolito said since financial incentives are important for those in private markets making investments in medical innovation, he is confident that reform will reduce pharmaceutical revenues, but he is not confident in the exact magnitude. 

Sachs agreed with Ippolito and challenged the idea that the direction of drug pricing reform was one-sided. Instead, she said expanding insurance, either specifically through pharmaceutical coverage in Medicare drug coverage or the Affordable Care Act, would increase uptake of prescription drugs, increasing returns to the pharmaceutical industry, and theoretically increasing medical innovation.

The panelists also discussed policies for increasing access to drugs for Medicaid and Medicare populations, exploring solutions in the financing and distribution of the hepatitis C therapy Sofosbuvir, marketed as Sovaldi, and the controversial Alzheimer’s drug Aducanumab, marketed as Aduhelm. 

Sachs said Sovaldi is the perfect example of a breakthrough drug that treated a condition prevalent among disadvantaged Americans, but states faced a difficult financing problem and were unable to distribute the drug to all patients. She said states will face a similar problem with Aduhelm, but there are still questions about its clinical efficacy. 

Socal added that the Alzheimer’s drug coming to market is clouded by complexity due to its clinical trials and the Food and Drug Administration approval process. She said the problem lies with the state and will require a rebalancing of incentives between the states and federal government.

The panelists also discussed and debated policies at the state level, including innovative payment models like a subscription model, or policies aimed at increasing transparency in drug prices for patients. They also discussed insulin — which has tripled in price in the past decade — and how to prevent a similar situation from happening with another drug in the future.

The panelists said among the intricacies of drug pricing reform, there are definitive solutions that Congress and pharmaceutical companies can and should enact, albeit none will be easily accomplished.

“In this complex pricing environment, it's hard to predict what the sort of trade-offs and all sorts of effects of these policies are,” Ippolito said.