Negotiating Prescription Drug Prices Won’t Resolve the Real Problems of Health Costs

Negotiating Prescription Drug Prices Won’t Resolve the Real Problems of Health Costs
The tools for good diabetes management.
J.G. Collins

The Biden administration and the Democratic National Committee took a premature victory lap last week for their purported “victory” to negotiate prescription prices. The fawning corporate media dutifully carried their water, reading off the Democratic National Committee talking points as if they were “news,” in an embarrassing display of how sadly the Fourth Estate in this country has declined.

The cheerleading was triggered by the administration’s release of the names of the 10 prescription drugs for which it will negotiate prices under the Inflation Reduction Act (IRA).

However, what you might have missed among the celebrations and cheerleading is that the earliest the negotiations would affect the actual cost of pharmaceuticals is 2026, more than two years from now and—fortuitously for the president—well after the 2024 elections.

But before that can happen, the president’s grand plan to “negotiate” (read: impose) prices must face a barrage of lawsuits from the pharmaceutical industry. The more circumspect among us rather smell the same kind of bait-and-switch the Democrats pulled with their faux “student debt forgiveness” prior to the 2022 midterm elections.

With its announcement, the Biden administration also touted its purported role in lowering inulin prices to $35 per month for Medicare recipients commencing at the start of this year. But generics and biosimilars were already seeing price reductions for some time. On March 1, Eli Lilly, for example, announced it would cap the out-of-pocket costs of its insulin products at $35 a month for all its customers, not just those on Medicare.

Sanofi, another insulin manufacturer, took similar steps two weeks later and noted it had been limiting the cost of insulin to $35 for Medicare Part D participants even before the Inflation Reduction Act, the law the Biden administration touted as triggering the price reductions. And one shouldn’t overlook President Trump’s executive order 13937 on insulin in July 2020, well before the Inflation Reduction Act, which had provided for insulin to be provided to indigent clients of federally qualified health centers at the FQHC’s cost. President Biden canceled the order on the pretext it was “administratively burdensome” shortly after he was sworn in. Forgive me if I again see politics at play.

Misplaced Priorities

Ignoring the likely deleterious effect the government’s price negotiation may have on pharmaceutical innovation, the Biden administration might have benefited public health more by any number of other measures to reduce drug prices—or, even better, to reduce or eliminate the need for them altogether.
The lowest-hanging fruit to reduce prescription drug prices is prohibiting “Big Pharma” companies from spending billions of dollars every year on TV advertising for prescription drugs. Pfizer, for example, spent $2.8 billion—nearly 3 percent of its gross revenues—on advertising. The United States is one of only two countries that allow it (the other is New Zealand, which has the population of Alabama).
Such advertising has been controversial since it was first commenced in 1983. While the University of Southern California found reasons to support and to oppose prescription drug advertising, in the 40 years since drugs were first advertised on TV, the internet has exploded. People with symptoms can Google their condition, find a physician, and read about a whole array of medications used to treat it, many with video links of the kind we see in expensive broadcast TV advertising.

Ameliorate the Causes Before Treating Symptoms

Most of the costly prescription drugs are treatments for symptoms of chronic illnesses rather than the illnesses themselves.

Root cause analysis is a process in management consulting whereby the symptoms of a given failure are traced back to their actual cause. For example, a restaurant might suffer a larger than normal incidence of its customers becoming sick after eating there. An analysis would look at things like the restaurant’s food suppliers, its cooking temperatures, its cleaning procedures, and its employees’ health and, ultimately, find that one server isn’t properly washing his or her hands after going to the toilet. Training that worker to wash his or her hands with soap and water after toileting would resolve the symptom of customers getting sick.

Root cause analysis would quickly show that after the cost of medications is reduced by eliminating TV advertising, government policy should target the national epidemic of obesity that is responsible for many of the chronic illnesses that require expensive medications.

Since 1963, Americans have become increasingly more overweight, obese, and morbidly obese. More than 40 percent of Americans are obese, and nearly 10 percent are now morbidly obese. Obesity-related conditions include heart disease, stroke, type 2 diabetes, and certain types of cancer. These are among the leading causes of preventable, premature death and add enormous costs to Medicare, Medicaid, the Veterans Administration, and other publicly funded health entitlements.

But there’s precious little effort from government to keep Americans fit. We could be doing things like encouraging local school boards to require proficiency in so-called “carry-over” sports as a condition of graduating. These sports, such as racquet sports, one-on-one basketball, swimming, running, and golf would allow America’s adults to maintain fitness without the need of teams that are prioritized in most high school sports.

We could also encourage other good behavior, like some large private employers do. Those companies encourage their employees to join gyms, stop smoking, do regular well-care check-ups to catch illnesses in their early stages and compensate those who do so. But governments offer no tax credit or deduction for joining a gym, quitting smoking, or reducing one’s body mass index (BMI) to a healthy level, even though the cost of being unhealthy accrues, ultimately, to taxpayers who are left to pay the costs after patients’ assets are exhausted.

For those who are morbidly obese—that is, with a BMI of 40 or more—and who could benefit from bariatric surgery, it is often a struggle to get their surgery covered by private insurance, Medicare, Medicaid, or the Veterans Administration, and paid for by Medicaid even though morbid obesity is a leading cause of chronic—and costly—health care. Bariatric surgery, while not always successful, should be encouraged more often if lifestyle changes fail to reduce one’s BMI to a satisfactory level. Those opting for the surgery should be monitored and incentivized to continue to maintain a healthy weight and lifestyle.

Sugar Shock

During the height of the COVID pandemic, I recollect a doctor who was interviewed mentioned that a morbidly obese woman the doctor had treated for COVID had a fasting blood sugar of 350 mg/dl (milligrams per deciliter); she was severely diabetic and had no idea she was. I know someone else who came to know they had diabetes only because they had an eye examination and the optometrist noted bleeding in the person’s blood vessels in the eye, a consequence of diabetes.

Such potentially deadly conditions should never go unnoticed and untreated in the United States.

According to the World Population Review, the average American consumes 126 grams of sugar daily; that equates to 10 tablespoons of sugar, or nearly two-thirds a cup of sugar, per person, per day. Of course, most people aren’t even aware of their consumption because the sugar is embedded in white/brown sugar, honey, high-fructose corn syrup, sucrose, dextrose, molasses, and other sweeteners in the foods they eat, from when they consume innocuous fruits and vegetables to when they “mainline” sugar drinking soda pop. (A single 20-ounce bottle of soda pop contains 16¼ teaspoons—a third of a cup—of sugar.)

For comparison, the average Japanese consumes around half the amount of sugar of Americans annually. It should come as no surprise, then, that, notwithstanding other factors, like homicide, which is much higher in the United States, the World Bank life expectancy in the United States is 77.28 versus 84.62 for Japan.

One would think that the myriad—and duplicative—federal agencies that weigh in on public health for Americans, like the Food and Drug Administration, the Centers for Disease Control, the Health, Education, and Welfare Department, the National Institutes for Heath, etc., would be screaming “hair on fire” warnings about the dangers of U.S. sugar consumption and how it affects weight and diabetes. But there is nary a whisper from Uncle Sam’s multiple agents. Americans who are barraged with messages about breast and prostate cancer, and the need for testing for both, hear nary a word about obesity or diabetes. And while President Joe Biden and the corporate media prattle on about “gun violence” almost daily, the death toll from diabetes is twice that of guns and four times that of gun homicides (most gun deaths are suicides). Little to nothing is said.

That’s because the sugar industry has cut a wide swath in Washington over 125 years. Elihu Root, who served successively as Theodore Roosevelt’s secretary of war and state, was counsel to the sugar trusts before assuming public office. It cannot be mere coincidence that the United States acceded to territorial control of Puerto Rico and the Philippines, two of the world’s largest sugar cane producers, after the Spanish American War (1898) as the former sugar industry counsel held the most prominent cabinet positions of government.

Today, the sugar industry spends over $15 million per year on lobbying, according to, a nonpartisan monitor of money in U.S. politics. It spends another $7 million on political contributions to candidates and organizations, split about evenly between Republicans and Democrats. But, as we shall see, that amount is dwarfed by the pharmaceutical industry, the greatest beneficiary of some of the chronic conditions brought on by obesity and diabetes.

An Agenda for Preventive Healthcare for Americans

Preventive care to avoid the onset of illnesses, particularly illnesses like obesity and diabetes that are so devastating to the welfare of Americans, is far superior to—and far less costly than—treatment. As the Medicare trust nears insolvency in the next decade, it’s critical we adopt a governing agenda to implement preventive care.
  • We should incentivize fitness by allowing tax deductions for healthy lifestyle choices, like joining—and showing up—at a gym or for buying exercise equipment where the usage can be tracked to avoid the equipment being used as an “expensive clothes hanger.”
  • Just as we give “free” flu shots that are actually paid for by government, Americans should be able to walk into any drugstore, fire house, or ambulance corps and get their fasting blood sugar and blood pressure tested, free. If safe thresholds are exceeded over three separate tests, the individual should be referred to video counseling on how to get their numbers into a safe range. They should be given vouchers for Bluetooth-enabled equipment like blood pressure cuffs, weight scales, and glucose monitors—less than $100 of merchandise at retail—and any of the multiple phone apps that monitor the conditions.
  • Medicare, Medicaid, and the VA should lower the thresholds for bariatric (“stomach shrinking”) surgery to a BMI of 35 if, after a year of diet, counseling, and exercise, it’s clear the person cannot control their weight.
  • Chain restaurants should be required to show the nutritional information of items shown on their menus. As more and more of them go to digital QR codes, where customers read their menu off their telephone, this should be much easier than it would have been just a decade ago.
  • The nutritional information that is written on every grocery store packaged food product should be presented in measures readily understandable to Americans. If I asked 100 people on the street how much a gram is, the only people that could tell me would be pharmacists, AP chemistry students, and drug dealers. (A single teaspoon is 4.2 grams.)
Finally, and most importantly, we must alter the lifestyles of America’s children to create healthier adults. Children need to be better educated about nutrition and the dangers of the “junk” food and drinks that are ubiquitous in the American diet. Schools should emphasize carryover sports and give participants the same prestige as the football team.
Schools should adopt a policy that former Arkansas Governor Mike Huckabee adopted for his state whereby schools measured a child’s BMI and the child’s parents were advised whether the child’s BMI was in a healthy range, and, if not, how parents could go about helping their child achieve a healthy weight. (It might even help to have teachers eat with their classes or high school homerooms to ensure children learn healthier eating habits and even proper table manners. This happens in France, where school lunch is both nutritious and elegant, almost mimicking a restaurant meal, even for young children.)


In 1965, some 42 percent of Americans smoked. Today, that percentage is down to 14 percent and declining. The change was effected through education, public policy, and not a little peer pressure (e.g., banning smoking in some offices). But it worked, and tens of millions of Americans who are former smokers are healthier today.

The same kind of public education and policymaking could help reduce the national epidemic of obesity, diabetes, and high blood pressure so that Americans remain healthier, longer, and at lower cost to Medicare, Medicaid, and the Veterans Administration. It will also reduce the need for new and more expensive prescription drugs over the long term.

Whether Washington will take up the challenge and bite the hand that feeds it—the pharmaceutical industry spent $375 million on lobbying in 2022—remains to be seen.

I’m skeptical America’s politicians will work so selflessly to improve the health of her citizens. There’s too much money to be made.

J.G. Collins is managing director of the Stuyvesant Square Consultancy, a strategic advisory, market survey, and consulting firm in New York. His writings on economics, trade, politics, and public policy have appeared in Forbes, the New York Post, Crain’s New York Business, The Hill, The American Conservative, and other publications.
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