The Inflation Reduction Act (IRA), which now sitting on President Joe Biden’s desk, will soon mark a milestone in the battle to lower drug pricing in the U.S., though it is still nowhere near widespread cost control for the entire population.
GoodRx (GDRX) co-CEO Doug Hirsch, whose company aims to find the best prices for generics as well as for some brand drugs, says that’s why his company is under no immediate threat from the IRA.
“Sadly, it’s not going to fix either American health care or impact our business,” Hirsch told Yahoo Finance in a recent interview.
“It would have been nice if they did more. But for now, it is what it is,” he added.
Hirsch has never balked at the idea that his business could be upended by a shift to a more equitable and efficient health care system, but he and others – including Mark Cuban with Cost Drugs Plus – know their services are still high in demand.
It’s also why GoodRx paid $150 million to acquire VitaCare and its prescription services – to help streamline the process from prescription to pickup.
Hirsch said that while most blame the drug makers for the high costs, it's more of a numbers game than anything. In some cases, a manufacturer will have a list price of thousands, but the actual out of pocket cost at the pharmacy ends up being affordable, he said.
There are outliers, of course, but because of the way drugs are distributed, prioritized and paid for by pharmacy benefits managers and insurers, and the relationships and networks created through the various players, it is hard for patients to know what their treatment will ultimately cost without doing some homework.
“The problem is it’s such a mess because of this crazy system we have that nobody knows that,” Hirsch said.
“It’s just the bizarreness of American health care,” he added.
Which is why the Inflation Reduction Act has been viewed by advocates as just the tip of the iceberg to help curb drug spending.
Within the Inflation Reduction Act, less than a dozen of the highest costing drugs will face negotiations from Medicare – which begin in 2026 – and Medicare out of pocket costs are capped at $2,000. That means that 63 million Medicare members will benefit from the moves – but the remainder of the more than 330 million in the U.S. will continue to struggle.
The bill had originally sought to cap the increase of a drug’s price as a ratio of inflation, but that did not make it through the Senate.
The bill passed the House late last week and is awaiting Biden’s signature.
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