Flying to Mexico to save on drug costs
Our expert's opinion
"This article starts with the description of a funny situation that you typically wouldn’t see anywhere else than in the United States. The State of Utah chose to pay flights for some of its employees to go to Mexico so they could buy their prescription drugs there at lower prices. It’s a 1-day trip but it apparently is still very cost efficient. It is known that drug pricing and lack of a social healthcare system in the US are big issues, but to come to these extreme solutions seems a bit silly (especially since the country is losing money this). Politicians are thinking hard about changes that could attack the pricing of drugs in the US. While big pharma companies do not seem threatened by this, I can’t help but fear about what could happen to the industry. The US is such huge part of the industry on the international level that we could very well feel the impact here in Belgium in some ways.
What is your take on this? Should we, Europeans, care about the drug pricing issues in the US?"
- Antoine Desprez, Associate Consultant
Utah flies employees to Mexico to save on drug costs
In a strange story that shows the lengths people will go to save on pharmaceuticals, Utah is paying for flights for a small number of public employees to Mexico to fill their drug prescriptions, Associated Press reports. One employee participating in the program regularly flies from Salt Lake City to San Diego, where a driver takes her to Tijuana so she can fill a prescription. Then, she travels home the same day. All of that travel still helps the state save versus having employees fill prescriptions in their home town.
It's the latest evidence that states are willing to get creative to fight drug prices amid years of inaction in Congress. States also have considered a number of measures to fight prices, including a subscription model, a pharmaceutical affordability board and more.
Elsewhere, with the Iowa caucus and President Donald Trump’s State of the Union speech last week, pharma again found itself a popular target in national politics.
Following the Iowa caucus, pharma should be on guard, Bernstein analyst Ronny Gal wrote in a note to clients. The two candidates who came out ahead in the pack—Pete Buttigieg and Bernie Sanders—each spent more time attacking the industry than others. That could cause other candidates to get more aggressive with their drug pricing tone, he wrote. Still, tougher rhetoric doesn't guarantee any drug pricing changes this year.
Trumps next step will be crucial
Up next, Gal will be watching Trump’s positioning. With the eventual Democratic candidate expected to be aggressive on pharma, that’ll force Trump to either “go further or redefine the field,” Gal wrote. In the first strategy, the president would push for “quick implementation of populist measures,” such as importation or the international price index. Alternatively, he could “walk away” from the issue and play down drug price controls as socialist, according to the analyst.
“The next couple of weeks will tell,” the analyst wrote.
At the State of the Union speech last week, Trump called on lawmakers to "get a bill to my desk" for a signature, USA Today reports. But as market watchers know by now, it remains unclear what such a drug bill would contain, or when it could be expected.
In response to Trump's statement, House Democrats chanted “HR 3," referencing the aggressive pricing proposal passed in that chamber that calls for government price negotiations, an international pricing index, fines for drugmakers who refuse to negotiate and more. Pharma prefers the Senate Finance Committee bill, which would set an out-of-pocket cap for patients and force new rebates on drugmakers for high price hikes.
Meanwhile, GoodRx has published the final tally of January price hikes. In all, more than 100 manufacturers raised the prices on 619 medicines last month. The average list price increase was 5.2%.
That compares with 601 increases in January 2019 at an average of 5.8%. In January 2018, the industry was even more aggressive, raising 729 prices at an average of 7.7%.