#Eakinomics: Addressing High Drug Prices

The American Action Forum today released a new #Eakinomics video in which AAF President Douglas Holtz-Eakin examines whether there is a prescription drug pricing crisis. In the video, Holtz-Eakin explains that there is no widespread prescription drug crisis but two very different problems exist in generic and specialty drugs that can be fixed:

“The first [problem] is in generic drugs where often you see a company buy a generic and then jack the price up. What’s the solution there? As usual in economics, more supply and greater competition that might come with better expedited approvals out of the Food and Drug Administration,” says Holtz-Eakin in the video.

“The second problem is the very high price of specialty drugs and specialty cancer treatments. Here the key is to make sure you get your money’s worth. It’s not a good idea to just pay for the pill, it would be a better idea to pay for good performance. The federal government can relax restrictions on the ability to do value based purchasing where firms get more the longer someone is well and the better they are.

“We don’t really have an overall crisis we have some targeted problems in generic and specialty drugs and they can be fixed,” concludes Holtz-Eakin.