Transparency Price Formation Trend in Health Systems

By  //  June 3, 2020

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The US Presidential Administration Donald Trump approved the final version of the bill, according to which medical institutions will have to conduct a transparent pricing policy.

The US Presidential Administration Donald Trump approved the final version of the bill, according to which medical institutions will have to conduct a transparent pricing policy.

This measure involves the publication of information on the number of discounts provided to patients, and information on rates agreed with insurers. For more information, please check here.

The law, which is due to enter into force in January 2021, reflects the Trump administration’s intention to lower healthcare costs. It is assumed that each hospital will have to publish annually in the public domain a list of standard prices (including gross costs; discounts for patients who pay in cash; etc.) for the services they provide, including the cost of treatment for groups of diagnoses approved in accordance with the Law about social security. Violators face a fine.

U.S. Secretary of Health and Human Services Alex Azar as covered by Theguardian.com hopes medical facilities, while respecting the rights of patients, will provide all the information about the cost of services, and will not take the lead from large pharmaceutical companies and discourage transparent pricing. 

That having price transparency creates a level of patient trust that translates into major savings for the healthcare industry, as pointed out by Canadianhealthcaremallrx.com, since it shows that generic drug price formation process is based on the work and materials used, while brand name pills charge for developmental stage and promoting.

Currently, no US state requires companies to provide information about their ultimate owner.

The new measure will require the following from corporations and limited liability companies:

• Disclose information about its beneficial owners, including names and identification numbers from a passport, driver’s license or other state identification card, at the time of registration.

• Provide a file of annual updates listing their current beneficial owners and any ownership changes that occurred during the previous year.

• Define the beneficial owner as anyone who has significant control, receives significant economic benefits, or owns 25% or more of the company.

Information about the owners will be transferred to the Ministry of Financial Crime Prevention Network (Finsen.gov), which will store information in an internal database available to other law enforcement agencies upon request.

A series of global investigations by the International Consortium of Investigative Journalists revealed how offshore shell companies were used in dubious financial transactions, including sanctions, tax evasion, and state corruption. Currently, most shell companies are concentrated in Panama, the US states of Delaware and Nevada.

More than two million corporations and LLCs are formed in the United States every year, and states currently do not require disclosure of beneficial ownership, according to Congressional findings in the text of the law.

Many law enforcement and national security officials have approved this legislation. They insist that the lack of transparency in the United States poses a serious threat to global efforts to combat corruption and political instability.

Drug Import from Canada to the U.S.

Canada does not have to worry about the importation of its drugs by the United States. Without consulting Ottawa, the Trump administration announced that it would put in place a system that would allow the Americans to legally import prescription drugs from Canada due to their very high prices in the United States.

Donald Trump has made cutting drug costs one of his priorities for re-election and has supported a Florida law that would allow residents to buy prescription drugs from Canada.

No less than 15 states in total have done the same or plan to do so. Colorado wants to move forward and it is not a bluff, said Democrat Sonya Jaquez Lewis, a pharmacist who sits in the Colorado House of Representatives.

In the United States, the same drug can cost up to ten times more than it does here. A vial of insulin sells for about $300 from our neighbors to the south and in Canada, $30.

No wonder aspiring Democratic presidential candidate Bernie Sanders chose it as an example and crossed the border this summer to get it in Ontario, where he denounced the inflated prices in his country and pharmaceutical greed.

A Possible Shortage in Canada?

American consumer groups see this competition as a way of reducing prices at home. Forty-five million Americans could not afford prescription drugs.

This is more than the entire population of Canada. The possibility of Americans buying prescription drugs in Canada was raised on September 12, 2019, during the debate between Democratic candidates for the presidency of the United States. It makes some people fear a shortage in Canada if the Americans can buy their drugs here in very large quantities.

In 2005, Health Minister in Paul Martin’s Liberal government, Ujjal Dosanjh, introduced a bill to ban the massive export of Canadian prescription drugs to the United States. Today, the same Ujjal Dosanjh accuses the federal government of sleeping on gas and asks it to wake up.

For the time being, Justin Trudeau has reacted rather lukewarm to the intentions of the Americans and says he is monitoring the situation. This risk had not been raised by any party during the election campaign.

Dr. Marvin Shepherd, an American researcher from Texas, anticipates the extremely negative impacts that this gesture could have for Canadian patients and insurers.

He said that it would take 118 days for Canada’s supply of prescription drugs to be exhausted if the Americans could eat here and that for certain cardiovascular drugs and insulin, for example, a shortage could even occur in Canada in less than 30 days.

The Canadian Pharmacists Association, which is already concerned about current drug shortages, the Canadian Medical Association and the Canadian Patient Safety Institute have urged Ottawa to take action to prevent Americans from “drying up” Canada’s drug supply.

The Canadian Association of Life and Health Insurance Companies declined to comment on Donald Trump’s plans in the absence of details.

The president of the Ordre des Pharmaciens du Québec (OPQ), Bertrand Bolduc, is much less worried than it seems to be in the other provinces. Despite the pessimistic opinion of American and Canadian experts, he was not alarmed.

According to Donald Trump, pharmaceuticals like Pfizer, Merck, Novartis and others have Canadian channels to sell in Canada, not to ship their stock to the United States.

When these companies sell their products to Canadian wholesalers, they have agreements that prevent them from re-exporting them. If they do, they don’t sell them anymore and they are cut out.

In addition, Canadian and Quebec pharmacists who buy from Canadian wholesalers are not allowed to wholesale. They just have to honor the prescriptions of a Canadian prescriber. They do not sell wholesale; it is not possible. If pharmacists do it, they will be pinched and brought into discipline.

Bertrand Bolduc added that Canada is negotiating the price of its drugs and that it is up to the President to do the same at home. He is the one who wrote the book Art of the Deal.

In Canada, there are mechanisms to negotiate prices, but they are more uniform for everyone while in the United States it is the jungle. If you are not insured or you are not a member of this or that, you pay the big price.

Not Possible in the Short, Medium and Long Term

The sale of drugs by Canadian pharmacists to Americans is not done in Quebec, or even in Ontario. Several barriers would prevent them.

The pharmacist who would do this would very soon find it impossible to source from suppliers and would have their arms twisted. It is however possible to mail-order Canadian medications and have them shipped into the U.S. bypassing those obstacles.

Another aspect, it is not possible for a pharmacist to sell his drugs to an external clientele, adds the president of the Order. If a tourist passing through Canada loses his medication for a month, he specifies, he will not be left in misery. He will be helped out, but the pharmacist cannot buy drugs from a wholesaler and send them elsewhere, across the border.

Obtaining prescription drugs from a Quebec pharmacy is not easy, Bertrand Bolduc reminds us: you have to see a local doctor, have an assessment, get a diagnosis in order to get a proper Quebec prescription. Prescriptions from American doctors are not accepted. In short, there are many pitfalls before Americans can start ordering drugs from Canada online or in person.

Import is not a Solution

The solution to high drug prices in the United States is not to import pharmaceuticals from another country and threaten their drug stocks.

Canada’s drug supply is not a long-term solution to the pricing problem of American-made drugs. The solutions are to solve the problems at home in the United States, such as opening competition, removing excessive government regulations, shortening the approval process for drugs, especially generics, improving the transparency of insurance providers and prosecuting those involved in drug pricing exploitations.

The Price of the US Drugs IS Mandatory in TV Commercials

The United States force pharmaceutical companies to list the price of their drugs on the screen in television commercials, a measure of historic transparency.

The measure is part of a policy of the American government to fight against the drift of the prices of drugs, often higher in the United States than in the bordering countries, Canada and Mexico.

The price must be displayed at the end of the advertisements, as well as the side-effects which are already obligatorily mentioned. In the United States, advertisements for drugs are part of daily life on television.

The obligation, which will apply in 60 days, relates to medicines priced at least $35 for normal treatment or per month. American patients have a right to know the price of the care they receive. The ten drugs most seen on television cost between 489 and 16,939 US dollars per month, according to the government.

About half of Americans have health insurance with a high deductible (depending on the case more than $5,500 or $6,500 per year), which means they usually have to pay the full advertised price until they have spent the amount of their annual deductible. Those with better coverage pay a fraction of the list price.

The situation can vary enormously from one person to another. Big announcement today: pharmaceutical companies must disclose their prices in TV commercials.

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