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Next president should attack drug prices .pdf

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Next president should attack drug
prices, Obama says in medical journal
July 11, 2016
Bloomberg News

President Barack Obama has written a game plan on health care for the next president, including a
crackdown on prescription drug prices that may cut pharmaceutical manufacturers’ profits if adopted.
In a first for a sitting president, the Journal of the American Medical Association published a
scholarly article on Monday by "Barack Obama, J.D." that examines the passage of his landmark
health law, the Affordable Care Act, and proposes future improvements to the U.S. health care
system. Obama wrote that a government-run insurance plan, the so-called “public option,” should be
made available to Americans buying coverage in parts of the country where competition is limited,
and that subsidies to reduce insurance premiums in Obamacare should be more generous.
Despite the ACA, "too many Americans still strain to pay for their physician visits and prescriptions,
cover their deductibles, or pay their monthly insurance bills; struggle to navigate a complex,
sometimes bewildering system; and remain uninsured," Obama wrote. "More work to reform the
health care system is necessary."
The article previews themes Obama will sound in the coming months, as he tries to shape the next
phase of the long-running political battle over the appropriate role for government in the U.S. healthcare system, administration officials said.
The priorities Obama set in his article have strong support within his party. Presumptive Democratic
presidential nominee Hillary Clinton and her rival in the presidential primaries, Senator Bernie
Sanders of Vermont, both called for the federal government to leverage its buying power to force
lower prices from drug companies. Clinton also backs a public option for Obamacare in all states,
and Sanders would go further, favoring a government-run universal health insurance program he
calls "Medicare for all."
Defense of Obamacare
In the article, Obama vigorously defended the ACA’s expansion of insurance coverage and said that
"trends in health care costs and quality" under the law "have been promising." About 20 million
Americans have gained coverage since the law was enacted in 2010, he wrote, and average growth
in spending per person in the Medicare program for the elderly and disabled "has actually been
negative" from 2010 to 2014.

Since the law took effect, the portion of nonelderly Americans unable to afford health care dropped
5.5 percentage points and the share describing themselves as in poor or fair health dropped 3.4
points, he wrote.
The article includes 68 citations and endnotes, though it was not formally peer-reviewed and JAMA
published it as a "special communication." It grew out of an appraisal of Obamacare’s
implementation that Obama ordered late last year, said Kristie Canegallo, a deputy White House
chief of staff. She said the goal was to "point future policy makers in the right direction" on health
Obama chose JAMA as a “serious” and “fact-driven” forum, Canegallo said.
‘High standards’
A group of senior editors at JAMA reviewed and critiqued the article and its factual claims, said
Howard Bauchner, the journal’s editor-in chief. The article went through two formal revisions and
additional editing over two months, he said.
"While we of course recognized the author is the president of the United States, JAMA has
enormously high standards and we certainly expected the president to meet those standards,"
Bauchner said in an interview.
The journal also published four editorials accompanying Obama’s article, including one by Obama’s
first director of the Office of Management and Budget, Peter Orszag. "Fundamentally, the ACA is
working," he wrote.
Stuart Butler, a former official at the conservative Heritage Foundation who is now a researcher at
the Brookings Institution, wrote that "some troubling trends in the ACA" had not been "adequately
discussed" in Obama’s article.
One of the chief problems with the law, he said, is that premiums and out-of-pocket costs for
insurance plans sold in government-run insurance exchanges are too costly, which has discouraged
enrollment by people who earn too much money to qualify for subsidies.
“For many households, the president’s promise of affordable coverage rings hollow and has not
been realized,” Butler wrote.
Drug prices
Describing work needed to improve the health law, Obama wrote that drug costs “remain a concern,”
citing a 12 percent increase in prescription drug spending in 2014. He called for legislation to
increase rebates drug manufacturers are required to provide to Medicaid and Medicare and to grant
more authority to the federal government to negotiate prices on high-cost drugs.
The pharmaceutical industry has long fought any such proposals, and the 2003 law that created
Medicare’s prescription drug benefit forbids the government from negotiating prices with
drugmakers. The White House scaled back demands for concessions on drug prices in negotiations

with the pharmaceutical industry when the Affordable Care Act was developed in 2009, in order to
win drugmakers’ support for the law.
“President Obama also uses misleading figures to lament the cost of prescription drugs, while saying
little about insurance companies actively pushing sick patients off their plans by increasing costsharing to unfathomable levels or refusing to cover drugs that patients need until it’s almost too late,"
Jim Greenwood, chief executive officer of Biotechnology Innovation Organization, an industry
lobbying group, said in an e-mailed statement.
BIO has sought to shift the blame for health-care costs to insurers, and has highlighted the value of
new medications. Greenwood is a former Republican member of the House of Representatives.
Obama called for a “public option” insurance plan in his 2008 presidential campaign and in his initial
health plan as president but abandoned the idea as part of a compromise to build congressional
support for the Affordable Care Act. The health insurance industry opposed the creation of a public
option that would compete with their plans, and Obamacare customers today are limited to buying
coverage from private insurers such as Indianapolis-based Anthem Inc., Aetna Inc. and Blue Cross
Blue Shield companies
Instead of a public option, the Affordable Care Act provided financing for 23 startup insurers called
"co-ops." More than half of them have failed.
Obama wrote that a public plan would provide consumers "more affordable options" on Obamacare’s
insurance marketplaces, particularly for the 12 percent of customers who live in regions with only
one or two participating insurers.

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