PUTTING AN END TO OUT-OF-CONTROL PRESCRIPTION DRUG PRICES

WHEREAS, nine in 10 Americans use prescription drugs, and three in four Americans say drug prices are unreasonable; and

WHEREAS, drug makers spend more on marketing, including direct-to-consumer advertising, than research and development used to discover innovative pharmaceutical treatments. However, for individual drugs, drug makers rarely disclose critical information related to the costs of production and pricing, including the share of research and development paid for by the manufacturer and by public agencies, marketing and advertising costs directed at consumers, prices charged to different buyers, and net prices after rebates; and 

WHEREAS, prescription drug costs are a major contributing factor to the rising cost of employer-sponsored and/or collectively bargained health plans. Prescription drugs are the single fastest-growing component of employer-sponsored insurance, accounting for 17 percent of total healthcare spending in 2016. The average family with employer-sponsored insurance spent $4,270 in 2016, a nearly fourfold increase from 2001 in which the average family spent $1,111; and 

WHEREAS, drug makers, often under the ownership of hedge funds and private equity firms, routinely increase prices for certain drugs without improving the therapeutic value to patients. Among the 25 prescription drugs with the largest price increases from 2013 and 2015, hedge funds and private equity firms had significant investments in 20 of them over the same period; and 

WHEREAS, rising prices for prescription drugs combined with an increase on patient cost-sharing—copays, coinsurance and deductibles—decreases the likelihood of adherence, resulting in worse health outcomes for patients and wasteful spending; and 

WHEREAS, high and rising prescription drug prices are a major contributing factor to the overall increase in the cost of employer-sponsored insurance, crowding out resources available for better staffing levels, professional development activities and higher wages. Most importantly, high prescription drug prices pose a barrier to patients’ ability to access needed care; and

WHEREAS, while the Medicare Modernization Act of 2003 prohibits the federal government from negotiating drug prices, the government uses its bulk purchasing power to benefit veterans and Medicaid recipients; and

WHEREAS, provisions in trade agreements often increase administrative costs, enable greater political and economic influence by pharmaceutical companies to intervene in government decision-making involving drug pricing and reimbursements, thereby limiting state and local government authority to address public health:

RESOLVED, that the American Federation of Teachers will support and promote legislative and policy solutions to ensure that high prescription drug prices do not impose barriers to patients’ ability to access needed care, and that prices reflect the clinical value to the patient and not the market power of drug makers; and 

RESOLVED, that Congress must give Medicare the power to negotiate drug prices to stabilize the market and establish competition among the drug manufacturers and to ensure affordable prescription drugs for all Medicare recipients, which ultimately may affect the price for all U.S. residents; and

RESOLVED, that the AFT will support and promote policy changes to expedite access to lower-cost generic alternatives to brand name prescription drugs. This includes ending anti-competitive practices, like “pay-for-delay” in which drug makers pay competitors to postpone the introduction of generic alternatives, and to “evergreening,” in which drug makers faced with expiring patents make cosmetic tweaks to an existing drug in order to extend the period of market exclusivity; and 

RESOLVED, that the AFT will encourage and support affiliates to seek state-level legislative and policy solutions to increase transparency and lower prices, such as the current bill in Massachusetts (S. 1048) that would require the manufacturers of certain drugs to report the costs of production and prices before and after rebates, and would grant the state the right to set the maximum allowable price for certain drugs with significantly high prices; and

RESOLVED, that the AFT will work toward trade solutions that protect against unfettered monopolies, price gouging and other anti-competitive behavior by pharmaceutical companies.