“Until 2003, Medicare covered most hospital and doctor visits for the elderly, but it did not cover the ever-growing costs of prescription medications. Former President George W. Bush changed that when he signed a law adding prescription drug coverage to Medicare.
But there was a catch.
At drug companies’ behest, the Republican-controlled Congress banned Medicare from using its market power to drive down drug prices. The prohibition was controversial at the time — Nancy Pelosi, then the House Minority Leader, called it “unconscionable.” Critics saw the prohibition as the government’s abandonment of the single most effective tool for restraining drug costs.
In the years since, the prices for brand-name prescription drugs have skyrocketed, and the prohibition on negotiation has become even more controversial. Higher prices mean larger co-payments for drugs for some seniors, many of whom live on fixed incomes. It’s also a major budgetary problem: From 2018 to 2021, Medicare spending on the 10 top-selling drugs jumped from $22 billion to $48 billion, far outpacing the program’s overall cost growth over the same period.
That’s why, in last year’s Inflation Reduction Act, President Joe Biden and congressional Democrats partly undid the prohibition. Under the law, Medicare will pay a much-reduced price for drugs that consume a disproportionate share of Medicare spending, ultimately saving an estimated $100 billion over the next ten years.”
…
“Although the Inflation Reduction Act marks the most substantial change in how we pay for drugs in two decades, it doesn’t change the fact that drug companies will still be rewarded for bringing a drug to market and selling as much of it as they can — whether or not the drug works very well.
Medicare could pave the way toward smarter drug development by paying more for more effective drugs and less for drugs that are less effective. That would send the right signals about where drug companies should target their research investments. The Inflation Reduction Act isn’t that law. We’ll spend less on prescription drugs because of it, and that’s all to the good, but we won’t be spending any smarter.”
…
“Some drugs are (literally) worth their weight in gold. Think of Sovaldi and Harvoni, which were approved a decade ago and can cure Hepatitis C, a deadly viral disease that once afflicted between 3 and 5 million Americans. Paying a lot for cures encourages drug companies to invest in developing drugs with curative potential.
But most drugs aren’t cures. Drug companies generally earn more, in fact, on drugs that patients take over an extended period. That helps explain why fully one quarter of all drug approvals are for cancer drugs. They’re really profitable, even though they often don’t work very well.”
…
“How we pay for drugs, in short, sends the wrong signals to the market about the kind of innovation we value. The good news is we can fix that. As law professor Rachel Sachs has argued, Medicare and Medicaid (and to some extent private insurers as well) are required by law to cover all FDA-approved drugs, whatever their value to human health. That linkage can be severed. We could give CMS the authority not only to drive down the prices of the most expensive drugs, as the IRA does, but also give it the power to pay less for, or even exclude coverage for, drugs of marginal efficacy.
Connecting payment to value would be complicated, and there’s no perfect way to do it. It would also be controversial: Paying less for some novel therapies would likely restrict access to therapies that some patients desperately want. But we’d send much smarter signals to drug manufacturers about where to target their investment dollars. And the benefits of better-targeted innovation would accumulate over time, vastly improving human health in the long run.
The IRA was meant to save the taxpayers’ money, not to improve their health. That was worth doing. But the next reform to payment policy ought to aim higher.”
“It is important to keep in mind that Oregon’s Measure 110 did nothing to address the supply of illegal drugs, which remain just as iffy and potentially deadly as they were before the initiative was approved. Decriminalization was limited to drug users, and it was based on the premise that people should not be arrested merely for consuming forbidden intoxicants. This distinction between drug users and drug suppliers is similar to the policy enacted during Prohibition, when bootleggers were treated as criminals but drinkers were not.
Measure 110 changed low-level drug possession from a Class A misdemeanor, punishable by up to a year in jail and a maximum fine of $6,250, to a Class E violation, punishable by a $100 fine. Drug users who receive citations can avoid the fine by agreeing to undergo a “health assessment” that is supposed to “prioritize the self-identified needs of the client.” That assessment might result in a treatment referral, but participation is voluntary.
Despite the limited nature of Oregon’s reform, which was not designed to reduce the hazards posed by the highly variable and unpredictable composition of black-market drugs, Stephens thinks the fact that drug-related deaths continued to rise in Oregon shows that decriminalization has failed. “In 2019 there were 280 unintentional opioid overdose deaths in Oregon,” he writes. “In 2021 there were 745.”
Stephens neglects to mention that drug-related deaths rose nationwide during that period, from about 71,000 in 2019 to more than 107,000 in 2021. The number of deaths involving opioids rose from about 50,000 to about 81,000—a 62 percent increase.
To be sure, the increase in Oregon that Stephens notes was much larger. But how does it compare to trends in other jurisdictions that did not decriminalize drug use?
Between 2019 and 2021, Oregon’s age-adjusted opioid overdose death rate rose from 7.6 to 18.1 per 100,000 residents. California saw a similar increase: from 7.9 to 17.8. In Washington, the rate likewise nearly doubled, from 10.5 to 20.5. And even in 2021, Oregon’s rate was lower than the national rate (24.7) and much lower than the rates in states such as Connecticut (38.3), Delaware (48.1), Kentucky (44.8), Maine (42.4), Maryland (38.5), Tennessee (45.5), Vermont (37.4), and West Virginia (77.2). On its face, this does not look like evidence that decriminalization is responsible for Oregon’s continuing rise in opioid-related deaths.*
While Measure 110 does not seem to have caused an increase in drug-related deaths, it manifestly did not prevent that increase.”
…
“a heavy drug user who steals to support his habit is not immune from criminal penalties. It also means the government can justifiably regulate what drug users do in public, where their actions might offend, incommode, or alarm people who have an equal right to use sidewalks, parks, and other taxpayer-funded facilities. Although Stephens implies otherwise, eliminating criminal penalties for drug possession does not require tolerating public drug use, defecation, or blowjobs.”
“From the perspective of drug traffickers, fentanyl has several advantages over heroin. It is much more potent, which makes it easier to smuggle, and it can be produced much more cheaply and inconspicuously, since it does not require opium poppies. Xylazine has similar advantages: It is an inexpensive synthetic drug that can be produced without crops. And unlike fentanyl, it is not classified as a controlled substance, which makes it easier to obtain.
American drug users are not clamoring for xylazine in their fentanyl, any more than they were demanding fentanyl instead of heroin. The use of such adulterants is driven by the economics of prohibition. And as usual with illegal drugs, consumers do not know what they are getting. Whether it is vitamin E acetate in black market THC vapes, MDMA mixed with butylone, levamisole in cocaine, or fentanyl pressed into ersatz pain pills, prohibition reliably makes drug use more dangerous.
Much to the dismay of veterinarians, drug warriors alarmed by tranq have proposed treating xylazine as a controlled substance. As usual, they think the solution to a problem created by prohibition is more prohibition.”
“When governments try to stop people from consuming politically disfavored intoxicants, they make consumption of those substances more dangerous by creating a black market in which purity and potency are highly variable and unpredictable.”
…
“Iran’s ban on alcohol consumption by Muslims forces drinkers to rely on illicit sources that sell iffy and possibly poisonous liquor. In a legal market, people who buy distilled spirits do not have to worry about methanol contamination.”
…
“Fentanyl is much more potent than heroin, so it is easier to smuggle, and can be produced much more cheaply and inconspicuously since it does not require opium poppies. Xylazine has similar advantages: It is an inexpensive synthetic drug that can be produced without crops. And unlike fentanyl, it is not classified as a controlled substance, so it is easier to obtain.
The emergence of fentanyl as a heroin booster and substitute made potency even harder to predict. The consequences can be seen in record numbers of drug-related deaths.
The government aggravated that situation by restricting the supply of legally produced, reliably dosed opioids, which drove nonmedical users toward more dangerous substitutes and left bona fide patients to suffer from unrelieved pain.”
“In a 2020 review of relevant studies published since the mid-1980s, the authors called out many of these studies for weak methodology. In particular, many researchers had failed to compare the outcomes they were measuring against any kind of a standard that would account for age and parental educational level. (That is: What if the kids of those who used cannabis during pregnancy were born to parents with lower levels of education, which could account for some differences?)
The review authors concluded that overall, “prenatal cannabis exposure is associated with few effects on the cognitive functioning of offspring.” What’s more, they noted, even when abnormalities were identified, almost all were still within the range of normal.”
…
“Despite the imperfect data, Mark suspects the risk of fetal harm with prenatal cannabis use is high enough to support recommending against purely recreational use.
“Drug prohibition sows the seeds of its own defeat by creating a highly lucrative and resilient black market that is always adjusting to enforcement efforts. When police arrest a drug dealer, someone else takes his place. Even dismantling an entire trafficking operation does not have a substantial and lasting impact on retail prices or consumption because it creates opportunities that other organizations are happy to seize.”
“It has been more than two years since New York notionally legalized recreational marijuana, and things are not going quite as planned. “Although Gov. Kathy Hochul suggested last fall that more than 100 dispensaries would be operating by this summer,” The New York Times notes, “just 12 have opened since regulators issued the first licenses in November.”
Part of the problem, as you might expect, is red tape and bureaucratic ineptitude. But another barrier to letting licensed marijuana merchants compete with the unauthorized vendors who have conspicuously proliferated since the spring of 2021 is the state’s affirmative action program for victims of pot prohibition.
New York, like several other states that have legalized marijuana, mandated preferences for license applicants who suffered as a result of the crusade against cannabis. While that idea has a pleasing symmetry, it never made much sense as a way of making up for the harm inflicted by cannabis criminalization. And in practice, executing the plan has drastically limited the legal marijuana supply, making it much harder to achieve the state’s avowed goal of displacing the black market.
To be clear: I don’t think people with marijuana convictions should be excluded from participating in the newly legal market, a policy that would add insult to injury. But that does not mean they should have a legal advantage over cannabis entrepreneurs who were never arrested but might be better qualified.”
…
“New York reserved the first batch of up to 175 retail licenses mainly for people with marijuana-related criminal records or their relatives. Those applicants needed to show they had experience running a “profitable” legal business in the state. Nonprofit organizations with “a history of serving current or formerly incarcerated individuals” also were eligible, provided they had “at least five full time employees,” “at least one justice involved board member,” and a track record of operating “a social enterprise that had net assets or profit for at least two years.” Another requirement was demonstrating “a significant presence in New York State,” which led to litigation and a temporary injunction against issuing retail licenses in five areas of the state.
Satisfying the state’s criteria required “a lot of documentation,” Bloomberg CityLab reporter Amelia Pollard noted last fall, which gave New York’s Office of Cannabis Management (OCM) “a mound of paperwork to wade through.” As of November, the OCM had received more than 900 applications from would-be marijuana retailers. On November 20, it announced that it had granted 36 “provisional conditional adult-use retail dispensary licenses” to individuals and organizations.”
…
“The approved retailers are far outnumbered by unauthorized vendors, many of whom openly sell marijuana from storefronts, trucks, and tables, unencumbered by the state’s licensing requirements, regulations, and taxes. Yelp’s list of the “best recreational marijuana dispensaries” in New York City includes 90 outlets, only a few of which are blessed by the OCM.”
“Pharmacy benefit managers are companies that, behind the scenes, determine what patients have to pay for medications. They manage insurance benefits for prescription drugs, dictating which drugs are covered by insurers and what costs patients will face when they fill their prescriptions.
To do that, they negotiate discounts, or rebates, with drug manufacturers and afford privileged status to the companies that give them the best deals.
And over the past few decades, as the prescription drug market has evolved and become more lucrative, so have PBMs. They run their own mail-order and specialty pharmacies. More recently, they have begun merging with health insurers, creating behemoth companies with the power to determine where and how billions of dollars are spent within the US health system.
Pharmacy benefit managers have become known as the mysterious middlemen of the pharma trade — and as a useful scapegoat for drug companies seeking to deflect blame from their own pricing practices.
Now the Senate, as part of forthcoming prescription drug legislation, appears poised to impose new rules on them. The committee overseeing health care debated last week a slew of measures requiring PBMs to be more transparent about their business and cracking down on some of their moneymaking practices.”
…
“Experts generally agree that these companies play a role in driving up drug costs for some US patients, even as they negotiate discounts with drugmakers that benefit others, and that the amount of secrecy about their financial arrangements warrants scrutiny.
But reforms to the PBM industry aren’t a cure-all for making drugs more affordable: Sanders said the PBM measures being considered in the Senate would not meaningfully lower the cost of medicine for most people, even if they would bring more accountability and transparency to the sector.”